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Export oriented Turkish textiles and apparel industry

The textile and apparel industry is the locomotive sector of the Turkish economy with a share of around 37 per cent (27.5 per cent for apparel and 9.5 per cent for textiles) in total export volume and 54 per cent for industrial exports. Thus, the sector can easily be described as export oriented. The average export/production ratio for textiles is 40 per cent and 70 per cent for apparel. Turkey has been an important supplier in the world textile market for the last two decades. Turkey ranks sixth in global apparel supply. Recent figures indicate that it is the 14th exporter worldwide in textiles.

Despite the economic constraints the rising trend in the export sector in 2001 is promising. The reasons behind this success can be summarised as follows:

Efficient and diversified raw material resources

Averaging an annual 800,000-900,000 tons of production, Turkey is the number one producer in Europe and sixth in the world in terms of cotton. Turkey alone meets 62 per cent of European cotton production while this ratio is 4.3 per cent for global production. Turkish cotton with its long fibre characteristics is known throughout the world. Furthermore, subsequent to completion of the Southeastern Anatolian Project, one of the biggest agricultural and energy projects in the world, cotton production is estimated to double by 2005. Nevertheless till this project is underway, Turkey seems to be a net importer of cotton, around 300,000 tons annually, since the need for cotton is about 1,200,000 tons. These figures indicate that Turkey is the fifth largest consumer of world cotton for its own production. Just to give an idea, Turkey’s cotton consumption is more than that of the EU.

Despite a downward trend in production which is more obvious in mohair, Turkey is the world’s eighth largest producer of wool and third of mohair. Annual production is approximately 46,000 and 600 tons respectively.

Turkey’s resources are not limited to natural ones only. The manmade textile industry which started in Turkey with the production of regenerated cellulose in 1938 and accelerated during 1964-75 with the first production of polyamide in 1964, polyester in 1968, acrylic in 1974 and polypropylene in 1975 also has got a strong base. Turkey today has the sixth largest synthetic fibre production capacity in the world.

Thanks to the investments which are over USD 50 billion just after 1995, Turkish capacity (in cotton system) represents 97 per cent and 78 per cent of EU for ring yarn and open-end yarn respectively, taking Turkey to number six and number four position respectively in the world. Almost 39 per cent of the capacity (in tons) is located in the Southeastern Anatolia Region which is followed by the Marmara Region with 22 per cent. Similarly Turkey has the largest capacity for weaving, apparel production and textile dyeing and finishing industry in comparison to the EU. Turkey ranks 13th in the number of shuttleless looms installed in the world. The Turkish machinery park is a fairly modern one, a great portion of which is below 10 years.

A well-trained labour force and spirit of entrepreneurship

Turkey possesses a relatively cheap but productive and well-trained labour force. The spirit of entrepreneurship provides Turkey certain advantages in planning and marketing with quick adaptation to production systems, quick response, etc in comparison to other countries especially the former communist bloc where the labour force is relatively much cheaper.

Quality and advanced technology

Turkey being fully aware of free enterprise requisites, is investing heavily to upgrade its machinery park. Turkey ranked 10th in purchasing high-tech machinery between 1985 and 1994. This ranking rose even further after 1994 due to the investments for adapting to Customs Union.

As a matter of fact, in 1995 Turkey became the largest importer in open-end yarn machinery, second in round knitting machinery behind China and sixth in ring yarn machinery in the world. Still, Turkey’s textile machinery imports play a large part in overall importation.

Customs Union which came into effect as of 1-1-1996 was the cornerstone of the Turkish foreign trade when Turkey in principle commenced applying the common customs policy of EU and have taken measures to conform to the agreements such as free trade agreements signed by the EU.

Turkey’s intensive efforts to access the EU market as well as the harmonisation of Turkish commercial code to that of the EU has led Turkish companies to adjust themselves to the new competition and achieve ISO standards and eco labels to survive.

Another distinguishing development during the period after the Customs Union with the EU is that the share of Anatolia in expense of Marmara Region, known as the castle of the sector, for sector exports is increasing steadily. Though sector exports have grown after 1996, the share of Anatolia has grown faster and reached 28.1 per cent of total sector exports which indicate 55 per cent of increase for Anatolian exports.

Share of sector exports

Consequently, as in other industries, the main foreign markets for Turkish apparel industry is the EU and and the US. Turkey is the top textile and second apparel supplier to the EU. Almost 65 per cent of Turkish textiles and apparel exports are directed to the EU and 16 per cent to the US.

Imports

Customs Union with EU has brought some advantages in many sectors but has also brought some disadvantages, especially in the textile and apparel sectors. Since in EU, these sectors are among the sectors which are not protected, by adapting the EU regulations, Turkey had to lower the customs duties, and thus open its markets to imports. Furthermore, the free trade agreements signed with the EU, gave the European countries more access to the Turkish market.

Due to economic instabilities, total sector imports have been lower than the peak level of US$ 3,609 million in 1997. Apparel imports seem to be more sensitive to business cycles. Just before the Customs Union agreement, imports reached its peak point in terms of percentage change in sector imports. The increase in apparel imports is always above textile imports. Especially in 1996 increase in apparel imports hit a record level of 186.2 per cent.

During the 1993-2000, period, textile and apparel imports climbed to USD 3,454 million from USD 1,689 million showing a two-fold increase. More than 88 per cent of the imports, in other words USD 3.2 billion, is textile imports. Even as the volume and share of apparel imports is far behind that of textiles, the increase in apparel imports is striking. During the same period apparel imports showed a five-fold increase and climbed to USD 256 million.

While the share of textile imports was an average fixed share of 6.5 per cent, both in the 1993-1995 and the 1998-2000 period the share of apparel imports climbed to 0.5 per cent from 0.16 per cent.

Cotton yarn and fabrics (HS 52), manmade filament yarn and fabrics (HS 54), manmade staple fibre yarn and fabrics (HS 55) imports, of around USD 2.4 billion constitute almost the total textile imports. Cotton yarn and fabrics imports alone are worth over USD 1 billion, although Turkey is the number one European and number six world producer of cotton as mentioned earlier. This is because almost 70 per cent of sectoral products are exported and of these products 80 per cent are made up of cotton. On the other hand, synthetic filament yarns and artificial filament yarns are the other main product groups in import of manmade textiles. The breakdown of imports according to HS codes indicated the structure of imports “as raw materials for export products.”