4 March 2019
Rising Costs Marginalise Exported Chinese Textiles in Turkish Market
Faced with continually rising costs, additional import tariffs, adverse currency fluctuations and low-quality perception, mainland-made fabrics now run the real risk of having an ever-diminishing share of Turkey's textile supply market.
Excluding raw materials, Turkey imports US$400 million of cloth and furniture coverings from China annually, a relatively tiny proportion of a domestic market estimated to be worth about US$10 billion. This may, in part, be down to the Turkish government's 2011 introduction of tariffs and quotas on certain Chinese textile imports, which, in a number of cases, pushed up the due duty by 30%. Despite such strictures, mainland interest in the Turkish market remains robust, as evidenced by the strong Chinese presence at Evteks, the long-established Istanbul International Home Textiles Fair.
In fact, there are clear signs that Chinese interest in the event is only increasing. Two years ago, there was just one mainland stand at the show – Beyond Tex, a Jiangsu-based manufacturer of furniture coverings. This year, there were 35 Chinese exhibitors.
Among these was a returning Beyond Tex, although the company had now been rebadged as Wuxi South Tex. Confessing herself happy with the number of business contacts made, if not the average prices on offer, Sales Manager Gül Cemal said: "It has not been easy, partly because our prices have had to increase by about 15%, but we are still winning new business."
Not all of it, however, was coming from Turkey. Indeed, one keen visitor to the stand was Franklin Rodrigues, a Portuguese buyer. Explaining his interest in the company's offer, he said: "The Chinese use a lot of polyester micro-fibres, which we don't have in Portugal. It allows them to create a range of special fabric effects that we're interested in taking advantage of."
Unlike such veterans as Wuxi South Tex, the Hangzhou Elite Power Fabric Company was actually making its debut at the event. Operating out of Guangdong and specialising in upholstery for the automotive industry, the company employs 500 people and has recently secured a multi-million-dollar contract to supply polyester seating fabric to Wisconsin-based Ashley Furniture.
Emphasising the importance of investing in new equipment in order to remain competitive, Sales Director Yao Yufeng said: "We won the Ashley order because we were able to offer the material at US$4 a metre. As part of the next stage of our development, we are investing in new weaving machines from Italy, Belgium and Germany."
Another Chinese company putting its faith in investment as a means of staying viable was the Jiangsu-based Hengli Group, a Fortune 500 business with more than 60,000 employees, which specialises in weaving and yarn-making. Explaining the group's philosophy, Export Sales Manager Doris Guo said: "We have invested heavily in new machinery from Germany and Japan and also from the domestic Chinese market. As a result, we have many customers in Turkey, most of whom buy our yarn to make fabrics. Our minimum order is one container-load and that would take us about a month to turn around."
Not every Chinese exhibitor, however, was relying on technological investment as a means of winning and retaining business. Indeed, the Haining Leading Textile Company, a Zhejiang-based manufacturer of polyester furniture coverings, had quite a different approach.
Outlining the route his business had taken, General Manager Ernie Tan said: "At first we won orders in Turkey because our products were cheaper. Over the years, though, we have worked ever more closely with our customers in order to meet their requirements and deliver the highest possible quality.
"As a result, we've now been selling into Turkey for 12 years and have an office in Istanbul. We also export to many other countries, including the USA, India, Iran and Azerbaijan."
Despite such success stories, many mainland textile producers still have something of an image problem among both Turkish buyers and those from further afield. Voicing the concerns of many in this regard, Mariana Marinova, a Bulgarian designer and buyer, said: "While Chinese products are rightly renowned for their low cost, the quality of the weaving is sometimes lacking. As a result, you have to be careful, as obviously they won't be as durable as the fabrics made to European standards."
Many, though, see the problems facing Chinese textile manufacturers as going well beyond quality-control issues. For Murat Güçer, Import / Export Manager of Reisoğlu, a Northern Turkey-based fabric supplier, the problem was fourfold.
Expanding on his evaluation of the current situation, he said: "Firstly, the exchange rate has hit many mainland firms hard. Next, the Chinese government has shut down a lot of dyeing and bleaching facilities in a bid to tackle the growing environmental concerns.
"Thirdly, this year, the level of government financial support for the sector has been cut by 1%. Finally, rising wages and the increased cost of raw materials has made a considerable impact on prices, bringing them much closer to the cost of producing such items within Turkey."
Despite such misgivings, Reisoğlu still buys 24 container-loads of fabric from China every year, representing a total purchase of about 1 million metres. Although this represents a substantial import volume, the company is increasingly turning away from mainland-produced goods in favour of Turkish-produced equivalents.
Explaining this shift in preference, Güçer said: "When we started buying from China some 20 years ago, it was largely on account of the low prices on offer. That was a particularly big factor for us as we sold much of the material on to another company, one that specialises in manufacturing curtains for export to Russia, Romania, Germany, Greece, Poland, Bulgaria and Iran.
"As of three years ago, we were still buying about 90 per cent of our stock from China. As the prices have increased, though, it is now about 50-50 between our mainland supplier and our local suppliers."
Not every Turkish buyer, however, was down on mainland suppliers. Indeed, a far more positive view was on offer from Ibrahim Emre, the Sales Manager of Istanbul-based Aydin Textiles, one of Turkey's largest producers of upholstery and drapery.
Citing his own experience, he said: "We buy bed fabrics, velvet, carpets and decorative rugs from China. To date, I've always found that mainland factories produce very good quality products."
A similarly positive experience was referenced by Haluk Hocaoğlu, the Sales Director of Kets, an Istanbul-based upholstery specialist. Adding a few cautionary words, though, he said: "We buy 80 containers of knitted fabric from China annually and the prices are still very competitive. We do, however, employ a team of China-based inspectors who check every order before it's shipped."
Taking more of an overview of the commercial relationship between China and Turkey was Atilla Bulut, the General Co-ordinator of TETSIAD, the Istanbul-based Turkish Home Textiles Industrialists Association, a trade body representing workers and businesses. Outlining the current realities of the market and his hopes for its future development, he said: "When it comes to tariffs, we have to protect our domestic market, but that doesn't mean we are anti-competition. China produces 50% of the world's home textiles, while Turkey only accounts for 5-6%, so there's certainly space for us to co-exist.
"Overall, though, I'd like to see more integration between the two countries and especially more investment from China within the framework of the Belt and Road Initiative [BRI]. This would be of huge benefit for those Chinese companies looking to target the European market, allowing them to work jointly with their Turkish counterparts and collaborate on trademarks.
"At the end of the day, home textiles is a personality-driven business, rather than a commodity-driven one. To be successful, companies need to forge long-term relationships based on mutual trust – and that is the direction I'd like to see Chinese and Turkish businesses heading."
Evteks took place at the CNR Expo in Istanbul. The event featured 846 exhibitors from 20 countries and attracted 130,000 visitors, including 50,000 overseas attendees.
George Dearsely, Special Correspondent, Istanbul