REPUBLIC OF BULGARIA Bulgarian Small and Medium Enterprises Promotion Agency PROJECT BG161РО003 4.2.01-0001, PROMOTION OF THE INTERNATIONALIZATION OF THE BULGARIAN ENTERPRISES Проект BG161РО003 4.2.01-0001, НАСЪРЧАВАНЕ НА ИНТЕРНАЦИОНАЛИЗАЦИЯТА НА БЪЛГАРСКИТЕ ПРЕДПРИЯТИЯ This project is financed by the European fund for regional development through an Operational programme Development of the competitiveness of the Bulgarian economy 2007 2013 Този проект е получил финансиране от Европейския фонд за регионално развитие чрез Оперативна програма Развитие на конкурентоспособността на българската икономика 2007 2013 Actualization of Export Strategy Manufacture of wearing apparel, including leather apparel, tanning of leather February 2014 of the Bulgarian Economy, cofinanced by the European Union through the.
LIST OF ABBREVIATIONS EU European Union BSMEPA Bulgarian Small and Medium Enterprises Promotion Agency MAF Ministry of Agriculture and Food MEE Ministry of Economy and Energy MRD Ministry of Regional Development SME Small and Medium Enterprises ITC International Trade Centre NCEA National Classification of Economic Activities NSI National Statistical Institute OP OTEA Office of Trade and Economic Affairs of the Bulgarian Economy, cofinanced by the European Union through the. 2
CONTENTS INTRODUCTION... 4 1. APPROACH FOR DEVELOPING THE EXPORT STRATEGY... 5 2. MAIN CONCLUSIONS OF THE ANALYSIS OF THE CURRENT SITUATION. 8 3. SWOT AND LOED ANALYSIS OF SECTOR "MANUFACTURE OF WEARING APPAREL, INCLUDING LEATHER APPAREL, TANNING OF LEATHER... 44 4. VISION AND OBJECTIVES... 48 5. STRATEGY FOR PROMOTING THE EXPORT OF SMES IN THE SECTOR.. 50 of the Bulgarian Economy, cofinanced by the European Union through the. 3
INTRODUCTION The export strategy for sector Manufacture of wearing apparel, including leather apparel, tanning of leather has been developed under Project No BG161РО003 4.2.01-0001 Promotion of the internationalization of the Bulgarian enterprises under Priority Axis 4 Strengthening the international market positions of Bulgarian economy under Operative programme Competitiveness of the Bulgarian economy, in the frame of Contract BG- 161PO003-4.2.01-001-C00001 for providing direct grants, under which the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA) is the institutional beneficiary. The objective of the export strategy for sector Manufacture of wearing apparel, including leather apparel, tanning of leather is to support the Bulgarian micro, small and medium-sized enterprises in the sector, in order to enhance their competitiveness, internationalization level and initial entering or expansion of the market share of Bulgarian products, in particular of those with higher added value. The Bulgarian state, represented by the BSMEPA, MEE and other government bodies, has recognized the SME sector to be extremely sensible and at the same time as having decisive importance in the economic field, deserving special attention. The diversity in the development of various industrial sectors, where the SME development has its place, as well as national priorities, related to promoting the country s export, require drafting of export strategies for certain sectors, one of which is Manufacture of wearing apparel, including leather apparel, tanning of leather. Focusing the support and defining of precise reference points for state intervention through its institutions, as well as offering development options for the rest of the participants in the process will strengthen in positive aspect the plan-based principle in state activities and as a result will improve the sector functioning. The successful realization of the Export strategy is expected to lead to the improvement of the process of entering international markets and the active expansion and strengthening of the market positions of Bulgarian small and medium enterprises, manufacturing wearing apparel. When developing the strategy, general consideration has been made of the findings and conclusions of the carried out studies of existing strategic documents and legal acts. The Methodology of Strategic Planning, drafted by the Council of Administrative Reform at the Council of Ministers of the R. of Bulgaria has also been taken into account. of the Bulgarian Economy, cofinanced by the European Union through the. 4
1. APPROACH FOR DEVELOPING THE EXPORT STRATEGY The export strategy is a strategic document, setting the mid-term objectives and priorities for the export development of SMEs from sector Manufacture of wearing apparel, including leather apparel, tanning of leather. It has been drafted on the basis of the strategic planning approach, which adroit use has the following advantages: Ensures good comprehension among stakeholders for the trends and what could bring the future; Creates general vision and consensus among stakeholders, by coordinating various initiatives under the selected objectives; Identifies the projects and actions undertaken or planned; Strengthens the partnership among the government bodies, the business and other parties for solving complex problems. When developing such a strategic document it is extremely important to precisely formulate the owner of the strategy, i.e. the institution or institutions responsible for the overall implementation of the strategic documents, as well as the concrete phases of the strategic planning. In general, the development of strategic documents includes the following stages: Assignment, Preparation, Development, Coordination, Approval, Implementation, Evaluation and Updating. Each of these stages contains specific activities, some of which, such as assignment, preparation, development, coordination, approval and, at a later period, updating, are part of the project implementation under the contract mentioned above. Therefore, the principal owner of the export strategy is the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA). For this reason, the goals, measures and actions set in the strategic document must first help BSMEPA improve the planning and implementation of activities related to the support of exports of SMEs in sector Manufacture of Food Products. This formal logic does not contradict to the fact that a significant number of institutions, businesses and even the population are involved as stakeholders and they might be influenced by means of different mechanisms, for example, the state institutions through the forms of coordination of strategic documents of such rank, and the branch associations and businesses by providing incentives to increase their export potential. It is of extreme importance for SMEs in the sector of Manufacture of Food Products to be able to see a clear and predictable export supporting state policy, which, though in the medium run, will allow them to decide whether to benefit or not from the created opportunities. The strategic planning process includes the following steps: Identification of the stakeholders Analysis of the environment of the Bulgarian Economy, cofinanced by the European Union through the. 5
SWOT analysis Vision Definition of targets Selection of alternative development strategy INFORMATION SOURCES In developing the export strategy the following main information sources have been used: National Statistical Institute Information, provided by the BSMEPA Information from the Ministry of Economy and Energy Eurostat International Trade Centre Information, published in relation to international forums and meetings Official electronic information sources Information, published by branch associations in the sector Information by the Bulgarian Industrial Association and the Bulgarian Chamber of Commerce and Industry, and their regional divisions Information from a survey, carried out in the period October 31 November 28, 2011 with the senior management of 5 (five) small and 22 (twenty-two) medium enterprises (total of 27), operating in the sector, and from a focus group. Information is processed with the will for maximum objectivity of the findings. In many cases, the analyzed information applies to sector Manufacture of wearing apparel, including leather apparel; tanning of leather as a whole, i.e. the information covers both SMEs and large enterprises, based on the assumption that if a Bulgarian company has been successful on certain markets, the same could be expected for another company as well, incl. from the group of SMEs. These specifics are explicitly underlined during the analysis. of the Bulgarian Economy, cofinanced by the European Union through the. 6
STRUCTURE OF THE EXPORT STRATEGY FOR SECTOR MANUFACTURE OF WEARING APPAREL, INCLUDING LEATHER APPAREL; TANNING OF LEATHER In determining the structure of the Export strategy for sector Manufacture of wearing apparel, including leather apparel; tanning of leather the use of the strategic planning approach is considered, which sets the general parameters of the strategic document. At the same time, a study was made of the structure of other institutional strategic documents, using the following estimation criteria: - providing opportunity for relatively easy access to the document through comprehensive and logical structuring of different parts; - presenting the content in an attractive and easy-to-understand manner accessible to non-professionals as well; - providing information thematically, i.e. structuring the material in a way that allows in-depth penetration into problems and analyzes only if desired by the reader. The above mentioned criteria were met by several of the studied strategies and they contained two clearly distinguished separate parts, namely: 1. A main document, in which the separate chapters are defined according to the above described technology of strategic planning. 2. Appendices that contain the complete text of the analysis, including conclusions, transferred to the main document. This approach was preferred in structuring the Export Strategy for sector Manufacture of wearing apparel, including leather apparel; tanning of leather. Following consultations with the Assignor, the findings and conclusions in the main document were supplemented with specific data and visualized by graphs and diagrams, thus increasing the information content of the document. of the Bulgarian Economy, cofinanced by the European Union through the. 7
2. MAIN CONCLUSIONS OF THE ANALYSIS OF THE CURRENT SITUATION This part contains the summarized conclusions of different analyses, included in Analysis of the environment. The conclusions and the analyses themselves are structured in 6 parts, as follows: STATE AND DEVELOPMENT OF THE SECTOR IN BULGARIA EXPORT ORIENTATION OF THE SECTOR GOODS WITH EXPORT ADVANTAGES AND POTENTIAL COMPETITIVENESS OF THE EXPORT OF GOODS ON FOREIGN MARKETS EXPORT PRIORITY PRODUCT GROUPS IN THE SECTOR AND MAIN MARKETS BARRIERS TO THE INTERNATIONALIZATION OF SMES AND MEASURES FOR THEIR OVERCOMING STATE AND DEVELOPMENT OF THE SECTOR IN BULGARIA Generally for sector Manufacture of wearing apparel, including leather apparel, tanning of leather The ownership in the sector is entirely private and most of the companies are micro, small and medium enterprises. This is a precondition for higher flexibility of production and better adaptation to market trends. The dynamics of production and turnover of companies in the sector, measured by the indexes of industrial production and turnover, show similar trends to those in industry total and in manufacturing in the period 2001 2012. The stable growth is crushed after 2007 and in 2012 the pre-crisis levels aren t yet recovered in terms of turnover on international markets and industrial production. The regional distribution of companies in the sector is uneven, as the biggest concentration is observed in the South-Western region and South-Central region, which is related to traditions in production. SMEs in sector Manufacture of wearing apparel, including leather apparel, tanning of leather The sector ranks second after manufacture of food products in terms of number of SMEs and it is a leader in terms of number of employed in manufacturing. The of the Bulgarian Economy, cofinanced by the European Union through the. 8
sector is one of the biggest employers in the country and in 2012 it provided employment to 24% of the employed in SMEs in manufacturing. The percentage of decrease in the number of companies and employed in 2012 compared to 2011 is similar to the average levels in manufacturing. In inner-sector aspect, Manufacture of outerwear, without working apparel, Manufacture of other wearing apparel and clothing accessories and Manufacture of footwear account for the biggest number of companies in the sector. SMEs in the sector generate 8% of the turnover and over 13% of the value added in manufacturing. Changes in 2012 compared to 2011 in both indicators are insignificant, and by these indicators the sector ranks second after sector Manufacture of food products. Notwithstanding the upward trend in labour productivity of SMEs in sector Manufacture of wearing apparel, including leather apparel, tanning of leather, it remains relatively low, making about 12% of average labour productivity of SMEs in the priority 18 sectors. Estimations of workforce quality and the relatively low priority of measures for raising the qualification of personnel allow concluding that the sector disposes of qualified workforce able to apply traditionally good practices in manufacturing. of the Bulgarian Economy, cofinanced by the European Union through the. 9
EXPORT ORIENTATION OF THE SECTOR Table 1. Export dynamics by sectors, 2001-2012 and Q1 2013 No Bulgarian export 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 thous BGN thous BGN thous BGN thous BGN thous BGN thous BGN thous BGN thous BGN thous BGN thous BGN thous BGN thous BGN thous BGN 1 Manufacture of food products 644297.7 904893 817561.4 1050215.7 1199256.1 1297381.9 1434796.1 2379559.2 2404247.4 2953443.6 3371929.6 3706047.3 850696.9 2 Manufacture of beverages 150226.7 144940.5 141343.9 140430.5 162754.3 174695 217350.3 209699.1 157279.2 180504 227279.4 242373.2 52636.7 Manufacture of textiles 3 and textile articles, except 340105.5 409171.9 493301.6 581648.7 589545 701292.8 803214.5 738479.1 560334.7 614506.7 755847.1 736689.7 194862.9 apparel 4 Manufacture of wearing apparel, including leather, 2435681.3 2691711 3068584.8 3190831.3 3159990.7 3320430.1 3321842.9 3034999.1 2598558.5 2741347.6 3130453.5 3003301 767142.7 leather 5 Manufacture of rubber and plastics 244250.9 275738.1 309562.9 364164.7 458864.1 579484.6 702892.1 662774.9 575682.6 785503.3 1050355.8 1155129.3 314795.5 6 Manufacture of chemicals and pharmaceuticals 953533.6 850754.7 890119.1 923062.5 1250677.4 1322021.6 1775909.1 2138948.8 1603436 2144402.2 2677815.7 2817421 709711.4 7 Production of non-metallic products and minerals 258748.7 265124.7 293742.9 301229.7 334480.7 514661 614248.3 633728.5 562709 688931.9 854202 957118.4 209799 8 Manufacture of machinery, equipment and household 700231.9 767646.2 800179.7 948099.8 1154034.7 1390424.5 1931544.2 2181999.2 1537950.9 1925968.4 2524450.9 2640294.7 683139.9 appliances 9 Manufacture of medical, precision and optical apparatus and instruments 68484 114332.5 153731.1 150824 205425.3 303755.3 359473.4 395080.3 392529.1 479543.1 600958.7 564353.8 102260.1 This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 10
No Bulgarian export 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 10 Manufacture of office machinery and computers 47476.8 70640.4 97961 121756.7 151726.6 189026.4 227643.6 271219.9 228431.4 281847.5 337916.9 390564 113343.3 and computers 11 Manufacture of electrical machinery and apparatus 359450.3 406486 545047.9 598251.6 701611.2 899523.6 1154155.5 1325826.2 1327215 1774543.6 2422665.5 2309023.8 707278.6 12 Manufacture of wood and cork, except furniture 192265.1 220109.1 245501.8 288059.3 285975.5 311237.9 380906 274022.1 259803.1 359102 419897.5 440466.3 98743.4 13 Manufacture of pulp, paper and paperboard and articles 120607.2 129009 170598 196676.6 200373.1 191179.5 237182 264951 134306.5 303874.6 380251 383729.7 107069.5 14 Manufacture of furniture 86524.4 124681.4 161768.1 196365.2 221591.5 237477.5 273462.2 256685.4 206577.8 237082 290280.7 374311.6 103431.4 15 Publishing, printing, reproduction 4173.1 6289.9 10103.3 7668.5 9301.8 11379.5 22014.7 25751 17772.6 14790.8 18107.3 23775.6 3654.4 16 Manufacture of motor vehicles other than cars 28605.2 41531.5 34692.9 42269.1 77655.9 99974.1 150461.6 208852.4 253659.2 390099 574547 544568.7 145599.4 17 Fabricated metal products, except machinery and 525909.1 508218.1 539211.9 748526.9 851665.2 1256090.9 1615683.5 1508280.3 1107334.1 1427109.8 1743745.2 1685497.1 440725.1 equipment 18 Manufacture of radio, television and 89242.5 155225.2 170705.2 186213.9 473170.9 514533.2 421408.3 528136.6 490199.3 464114.5 464219.8 576824.1 123868.3 communication equipment Total, 18 sectors 7249814.1 8086503.1 8943717.2 10036295 11488100 13314570 15644188 17038993 14418026 17766715 21844924 22551489 5728758.5 BG exports 11155564 11886801 13026810 15613700 18436113 23511655 26503711 29889710 23143143 30353296 39549819 40602529 10215544 Structure (Share of the sector in the national exports, %) 1 Manufacture of food products 5.78 7.61 6.28 6.73 6.5 5.52 5.41 7.96 10.39 9.73 8.53 9.13 8.33 2 Manufacture of beverages 1.35 1.22 1.09 0.9 0.88 0.74 0.82 0.7 0.68 0.59 0.57 0.6 0.52 Manufacture of textiles 3 and textile articles, except 3.05 3.44 3.79 3.73 3.2 2.98 3.03 2.47 2.42 2.02 1.91 1.81 1.91 apparel 4 Manufacture of wearing apparel, including leather, leather 21.83 22.64 23.56 20.44 17.14 14.12 12.53 10.15 11.23 9.03 7.92 7.4 7.51 This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 11
No Bulgarian export 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 5 Manufacture of rubber and plastics 2.19 2.32 2.38 2.33 2.49 2.46 2.65 2.22 2.49 2.59 2.66 2.84 3.08 6 Manufacture of chemicals and pharmaceuticals 8.55 7.16 6.83 5.91 6.78 5.62 6.7 7.16 6.93 7.06 6.77 6.94 6.95 7 Production of non-metallic products and minerals 2.32 2.23 2.25 1.93 1.81 2.19 2.32 2.12 2.43 2.27 2.16 2.36 2.05 8 Manufacture of machinery, equipment and household 6.28 6.46 6.14 6.07 6.26 5.91 7.29 7.3 6.65 6.35 6.38 6.5 6.69 appliances 9 Manufacture of medical, precision and optical 0.61 0.96 1.18 0.97 1.11 1.29 1.36 1.32 1.7 1.58 1.52 1.39 1 apparatus and instruments 10 Manufacture of office machinery and computers 0.43 0.59 0.75 0.78 0.82 0.8 0.86 0.91 0.99 0.93 0.85 0.96 1.11 and computers 11 Manufacture of electrical machinery and apparatus 3.22 3.42 4.18 3.83 3.81 3.83 4.35 4.44 5.73 5.85 6.13 5.69 6.92 12 Manufacture of wood and cork, except furniture 1.72 1.85 1.88 1.84 1.55 1.32 1.44 0.92 1.12 1.18 1.06 1.08 0.97 13 Manufacture of pulp, paper and paperboard and articles 1.08 1.09 1.31 1.26 1.09 0.81 0.89 0.89 0.58 1 0.96 0.95 1.05 14 Manufacture of furniture 0.78 1.05 1.24 1.26 1.2 1.01 1.03 0.86 0.89 0.78 0.73 0.92 1.01 15 Publishing, printing, reproduction 0.04 0.05 0.08 0.05 0.05 0.05 0.08 0.09 0.08 0.05 0.05 0.06 0.04 16 Manufacture of motor vehicles other than cars 0.26 0.35 0.27 0.27 0.42 0.43 0.57 0.7 1.1 1.29 1.45 1.34 1.43 17 Fabricated metal products, except machinery and 4.71 4.28 4.14 4.79 4.62 5.34 6.1 5.05 4.78 4.7 4.41 4.15 4.31 equipment 18 Manufacture of radio, television and communication equipment 0.8 1.31 1.31 1.19 2.57 2.19 1.59 1.77 2.12 1.53 1.17 1.42 1.21 This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 12
No Bulgarian export 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 Total, 18 sectors 64.99 68.03 68.66 64.28 62.31 56.63 59.03 57.01 62.3 58.53 55.23 55.54 56.08 BG exports 100 100 100 100 100 100 100 100 100 100 100 100 100 Base index, 2001=100 1 Manufacture of food products 100 140.45 126.89 163.00 186.13 201.36 222.69 369.33 373.16 458.40 523.35 575.21 2 Manufacture of beverages 100 96.48 94.09 93.48 108.34 116.29 144.68 139.59 104.69 120.15 151.29 161.34 Manufacture of textiles 3 and textile articles, except 100 120.31 145.04 171.02 173.34 206.20 236.17 217.13 164.75 180.68 222.24 216.61 apparel 4 Manufacture of wearing apparel, including leather, 100 110.51 125.98 131.00 129.74 136.32 136.38 124.61 106.69 112.55 128.52 123.30 leather 5 Manufacture of rubber and plastics 100 112.89 126.74 149.09 187.87 237.25 287.77 271.35 235.69 321.60 430.03 472.93 6 Manufacture of chemicals and pharmaceuticals 100 89.22 93.35 96.80 131.16 138.64 186.25 224.32 168.16 224.89 280.83 295.47 7 Production of non-metallic products and minerals 100 102.46 113.52 116.42 129.27 198.90 237.39 244.92 217.47 266.26 330.13 369.90 8 Manufacture of machinery, equipment and household 100 109.63 114.27 135.40 164.81 198.57 275.84 311.61 219.63 275.05 360.52 377.06 appliances 9 Manufacture of medical, precision and optical 100 166.95 224.48 220.23 299.96 443.54 524.90 576.89 573.17 700.23 877.52 824.07 apparatus and instruments 10 Manufacture of office machinery and computers 100 148.79 206.33 256.46 319.58 398.15 479.48 571.27 481.14 593.65 711.75 822.64 and computers 11 Manufacture of electrical machinery and apparatus 100 113.09 151.63 166.44 195.19 250.25 321.09 368.85 369.23 493.68 673.99 642.38 12 Manufacture of wood and cork, except furniture 100 114.48 127.69 149.82 148.74 161.88 198.11 142.52 135.13 186.77 218.40 229.09 This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 13
No Bulgarian export 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013 13 Manufacture of pulp, paper and paperboard and articles 100 106.97 141.45 163.07 166.14 158.51 196.66 219.68 111.36 251.95 315.28 318.16 14 Manufacture of furniture 100 144.10 186.96 226.95 256.10 274.46 316.05 296.66 238.75 274.01 335.49 432.61 15 Publishing, printing, reproduction 100 150.73 242.11 183.76 222.90 272.69 527.54 617.07 425.89 354.43 433.91 569.74 16 Manufacture of motor vehicles other than cars 100 145.19 121.28 147.77 271.48 349.50 525.99 730.12 886.76 1363.74 2008.54 1903.74 17 Fabricated metal products, except machinery and 100 96.64 102.53 142.33 161.94 238.84 307.22 286.79 210.56 271.36 331.57 320.49 equipment 18 Manufacture of radio, television and 100 173.94 191.28 208.66 530.21 576.56 472.21 591.80 549.29 520.06 520.18 646.36 communication equipment Total, 18 sectors 100 111.54 123.36 138.44 158.46 183.65 215.79 235.03 198.87 245.06 301.32 311.06 BG exports 100 106.55 116.77 139.96 165.26 210.76 237.58 267.94 207.46 272.09 354.53 363.97 Source: ITC and own calculations This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 14
Generally for sector Manufacture of wearing apparel, including leather apparel, tanning of leather The sector ranks first among the 18 sectors with export potential. In the period 2001 2012, the total Bulgarian export of wearing apparel amounts to BGN 35,7 billion, and in 2012 it accounted for 7,4% of total national exports. The position of the Bulgarian products on the international market both in the manufacture of wearing apparel and in the tanning of leather and footwear manufacture is stable and records progress until 2007. The levels of 2007, before the world economic crisis, are restored by end-2010, implying a recovery of consumption on the foreign markets and increase in orders. This positive trend continued in the next two years 2011 and 2012, indicating for stabilization of the sector. SMEs in sector Manufacture of wearing apparel, including leather apparel, tanning of leather In 2011 and 2012, the sector ranks first in terms of share of SMEs in total exports of the sector and in 2012 this share was 58%. This ranking is indicative of the great importance of SMEs for the development and export capacities of the sector. In 2012, there was some decrease in the volume of exports of SMEs compared to 2011, yet their share in total exports of the sector registered a 1 p.p. increase Although annual fluctuations are not the basis of making conclusions, evidence suggests that small and medium-sized enterprises in the sector begin to partly overcome the decline from 2010 resulting from the global financial and economic crisis The largest export shares in 2012 are held by the companies in Manufacture of wearing apparel, excl. leather apparel accounting for 94% of the export of companies in Manufacture of wearing apparel and the companies in Manufacture of footwear, accounting for 76% of the export of companies in Tanning of leather, manufacture of footwear and related leather products. In terms of the indicator volume of exports per 1 employed sector Manufacture of wearing apparel, without leather apparel ranks 9 th among the 18 analyzed sectors, indicating orientation towards foreign markets. SMEs which participated in the company survey work mainly for export for the whole analyzed period the number of companies, exporting more than 60% of their production is prevailing, and in 2011 their share reached 80%. Companies in the sample export directly without the mediation of trade companies, creation of joint trade activity with other companies, etc. of the Bulgarian Economy, cofinanced by the European Union through the. 15
GOODS WITH EXPORT ADVANTAGES AND POTENTIAL The product groups, manufactured and exported in sector Manufacture of wearing apparel, including leather apparel, tanning of leather are extremely numerous. Therefore the selection of product groups with export advantages and potential was done on the basis of several criteria, namely: highest relative share in the export of the corresponding product group, growth during the studied period, or big export volumes achieved before the beginning of the global economic crisis. The analysis includes also the product groups with relatively stable exports during the studied period. These criteria were applied for the sector in total, as official statistical information on SMEs is not available. The application of the selected criteria to data of the International Trade Centre allows determining the following 13 product groups, which have export advantages and potential: Articles of apparel and clothing accessories, knitted or crocheted 1. Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, knitted or crocheted 2. Women s blouses, shirts and shirt-blouses, knitted or crocheted 3. T-shirts, singlets and other vests, knitted or crocheted 4. Jerseys, pullovers, cardigans, waistcoats and similar articles, knitted or crocheted. Articles of apparel and clothing accessories, not knitted or crocheted 5. Women s or girls overcoats, capes cloaks and anoraks other than those of heading 6204 6. Men s or boys suits 7. Women's or girls' suits Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut 8. Trunks, suit-cases, vanity-cases, executive-cases, brief-cases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; travelling bags, insulated food bags 9. Articles of apparel and clothing accessories, of leather or of composition leather Footwear, gaiters and the like; parts of such articles 10. Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather of the Bulgarian Economy, cofinanced by the European Union through the. 16
11. Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials 12. Other footwear 13. Parts of footwear (including uppers, whether or not attached to soles other than outer soles); removable in-soles, heel cushions and similar articles, gaiters, leggings and similar articles and parts thereof The main findings of the analysis of the ranking of Bulgaria in world exports, export dynamics, and the position of the country in terms of export of the selected product groups in the sector are summarized in the table below: of the Bulgarian Economy, cofinanced by the European Union through the. 17
Table 2. Export of Bulgaria by product groups for the period 2001-2012 (thous. EUR) Product groups 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches, and shorts (other than 230 061 246 529 274 237 282 619 267 394 280 224 295 780 260 558 209 678 204 503 225 892 219 760 swimwear), knitted or crocheted Men s or boys suits, ensembles, jackets, blazers, trousers, bib and brace overalls, breeches and shorts (other than swimwear) 161 657 174 256 215 273 249 851 272 417 280 081 255 674 237 673 175 108 183 709 226 244 225 921 Women s or girls coats, capes, cloaks, anoraks, jackets, anoraks and similar articles, knitted or crocheted, excluding articles from 6204 34 717 38 649 41 215 58 589 52 079 51 323 51 703 64 350 59 416 64 586 73 645 67 129 Women s or girls shirts, blouses, shirts and shirt-blouses, knitted or crocheted 88 582 114 307 164 746 159 700 138 356 143 332 150 492 121 808 115 078 101 226 98 522 89 711 Jerseys, pullovers, cardigans, waistcoats and similar articles, knitted or crocheted 80 498 97 386 108 046 111 566 114 390 123 910 103 828 99 405 97 762 95 216 94 993 89 961 Shirts without collar (T-shirts) and other shirts, knitted or crocheted 93 752 100 277 108 002 126 515 118 960 119 627 121 862 98 839 89 870 85 534 92 686 101 932 Women s or girls suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches, and shorts 27 435 32 669 34 468 35 216 29 801 41 126 62 168 56 487 60 599 73 696 91 435 102 265 (other than swimwear), knitted or crocheted Trunks, suitcases, vanity cases briefcases and briefcases, briefcases, school satchels, spectacle cases, binocular cases, camera batteries, camera cases, musical instrument cases, holsters and similar 24 925 28 340 33 756 33 351 29 820 32 079 36 727 34 778 23 552 30 344 37 829 38 878 containers; insulated bags for food Articles of apparel and clothing accessories, of leather or of composition leather 2 632 2 755 3 071 2 899 2 311 2 472 3 115 2 403 1 842 3 390 3 234 2 109 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather; 50 166 58 909 62 366 59 390 71 241 73 304 73 327 66 510 65 923 73 951 83 395 72 448 Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable insoles, heel cushions and similar 81 889 83 239 89 130 72 213 72 845 74 301 75 637 69 776 53 421 70 904 88 183 76 735 articles; gaiters, leggings and similar articles and parts thereof Other footwear 31 654 17 377 25 265 30 292 27 180 30 978 16 385 12 060 12 385 19 097 20 272 13 802 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials. 8 915 10 064 11 543 8 509 8 727 10 185 9 494 9 995 9 235 13 135 14 934 13 142 Source: ITC and own calculations This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 18
Product groups Suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches, and shorts (other than swimwear), knitted or crocheted Men s or boys suits, ensembles, jackets, blazers, trousers, bib and brace overalls, breeches and shorts (other than swimwear) Women s or girls coats, capes, cloaks, anoraks, jackets, anoraks and similar articles, knitted or crocheted, excluding articles from 6204 Women s or girls shirts, blouses, shirts and shirtblouses, knitted or crocheted Jerseys, pullovers, cardigans, waistcoats and similar articles, knitted or crocheted Table 3. Bulgaria s export in world exports and in the export of the leading world exporter by product groups Rank in the world export Share in the world export Share in the export of the leading world exporter in 2010 2001 2010 2011 2012 Q1, 2010 2011 2012 Q1, 2001 2010 2011 2012 2013 2013 Change in exports in 2011 compared to 2001 Change in exports in 2012 compared to 2001 27 25 25 26 18 0.57% 0.58% 0.53% 0.68% 4.21% 1.81% 1.94% 1.74% -2% -4% 32 29 28 28 18 0.67% 0.68% 0.69% 1.08% 3.49% 2.61% 2.88% 2.80% 40% 40% 25 17 19 20 17 0.74% 0.74% 0.64% 0.52% 2.97% 1.52% 1.42% 1.35% 112% 93% 14 18 17 19 13 2.19% 2.25% 1.95% 2.59% 83.28% 21.24% 22.06% 18.40% 11% 1% 37 34 35 35 25 0.28% 0.34% 0.24% 0.35% 1.50% 0.74% 0.66% 0.59% 18% 12% This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 19
Product groups Shirts without collar (Tshirts) and other shirts, knitted or crocheted Women s or girls suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches, and shorts (other than swimwear), knitted or crocheted Trunks, suitcases, vanity cases briefcases and briefcases, briefcases, school satchels, spectacle cases, binocular cases, camera batteries, camera cases, musical instrument cases, holsters and similar containers; insulated bags for food Articles of apparel and clothing accessories, of leather or of composition leather Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather; Rank in the world export Share in the world export Share in the export of the leading world exporter in 2010 2001 2010 2011 2012 Q1, 2010 2011 2012 Q1, 2001 2010 2011 2012 2013 2013 Change in exports in 2011 compared to 2001 Change in exports in 2012 compared to 2001 30 39 38 36 27 0.33% 0.26% 0.34% 0.46% 3.76% 1.55% 1.62% 1.64% -1% 9% 32 28 26 26 18 0.36% 0.38% 0.33% 0.42% 1.48% 0.67% 0.66% 0.53% 233% 273% 32 32 32 35 30 0.10% 0.10% 0.09% 0.11% 0.58% 0.22% 0.22% 0.20% 52% 56% 48 48 52 61 52 0.06% 0.05% 0.03% 0.02% 0.08% 0.20% 0.20% 0.13% 23% -20% 33 36 37 41 0.21% 0.22% 0.18% 1.05% 0.95% 1.07% 0.86% 66% 44% This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 20
Product groups Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable insoles, heel cushions and similar articles; gaiters, leggings and similar articles and parts thereof Rank in the world export Share in the world export Share in the export of the leading world exporter in 2010 2001 2010 2011 2012 Q1, 2010 2011 2012 Q1, 2001 2010 2011 2012 2013 2013 Change in exports in 2011 compared to 2001 Change in exports in 2012 compared to 2001 16 18 17 19 34 1.29% 1.44% 1.23% 0.21% 17.51% 4.78% 5.23% 4.00% 8% -6% Other footwear 9 22 23 26 14 0.56% 0.54% 0.21% 1.48% 8.13% 0.97% 0.93% 0.27% -36% -56% Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials. Source: ITC and own calculations 33 34 36 41 22 0.13% 0.12% 0.09% 0.19% 0.57% 0.31% 0.29% 0.21% 68% 47% This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 21
Presented data show that in 2011 and 2012 the best ranking among world exporters have the product groups Women s or girls blouses, shirts and shirt-blouses, knitted or crocheted, Women s or girls overcoats, car-coats, capes cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles other than those of heading 6204, and Parts of footwear (including uppers, whether or not attached to soles other than outer soles); removable in-soles, heel cushions and similar articles, gaiters, leggings and similar articles and parts thereof. The former product group holds the best position in terms of Bulgaria s in world exports (respectively 2,25% and 1.95%). Among the most successful product groups on international markets are goods with both high and low added value. The product groups women's or girls' suits and men s or boys, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear) are among the product groups with the largest export volume. Huge demand and respective supply of this type of commodities determine their more unfavourable ranking among the analysed products, regardless of their higher added value. Changes in the export volume of analyzed commodities over the studied 12-years period are not unidirectional. The most significant growth in exports in 2012 compared to 2001 is observed in product groups Women s or girls suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear), knitted or crocheted and Women s or girls overcoats, car-coats, capes cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles other than those of heading 6204, while the group Other footwear records the most significant decrease in export volumes (respectively, the greatest loss of positions in the ranking of world exporters). Both at the beginning and at the end of the examined period the smallest share in world exports is registered by product group Articles of apparel and clothing accessories, of leather or of composition leather (also accounting for the worst ranking of Bulgaria among world exporters). It should be concluded therefore that products from the analyzed group do not answer the demand and preferences of consumers from different foreign trade partner-countries of Bulgaria. SMEs in sector Manufacture of wearing apparel, including leather apparel, tanning of leather The above presented data on the analyzed product groups relate to all companies in the sector and not only to SMEs. The lack of sufficient statistical information prevents determining the share of the export of SMEs in the export of analysed product groups. of the Bulgarian Economy, cofinanced by the European Union through the. 22
Certain orientation is provided by the results obtained from the company survey carried out in the period 31 October 28 November 2011. Companies in the sample declare that their main exports in 2010 include swimwear, underwear, overcoats, women s and men s ready-to-wear clothing, footwear. Nearly 93% of the interviewed managers of SMEs consider that the companies have sufficient production capacity for the manufacture of export goods. Even part of the companies, still not exporting, but willing to, declare such capacity. In 96% of surveyed companies the management teams have the will to export the manufactured products. Due to the profile of surveyed companies, they export finished products with more specific qualities (according the offered classifications raw materials, semimanufactured goods and finished products) with high level of processing and respectively high added value. It can be assumed that this is the niche, where SMEs might have greater success in exports. The above conclusion is further confirmed by the fact that managers of interviewed SMEs consider high technology level and qualification of personnel of small and medium enterprises factors of crucial (decisive) importance for the export success, which are the main prerequisites for the creation of high value added products. COMPETITIVENESS OF THE EXPORT OF GOODS ON FOREIGN MARKETS The main markets of the analysed product groups in sector Manufacture of wearing apparel, including leather apparel, tanning of leather in 2012 are presented hereinafter and they are determined on the basis of data on the Bulgarian export of each product group. Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear) o Main markets are Germany, France and Italy. o The main product in this group with the largest export to the leading market Germany is Women's or girls' trousers, breeches, of cotton (not of cut corduroy, of denim or knitted or crocheted and excl. industrial and occupational clothing, bib and brace overalls, briefs and tracksuit bottoms), i.e. product with higher added value. o Main competitors on the leading market are China and Turkey, being among the leading manufacturers worldwide, with established traditions in the manufacture of this product. of the Bulgarian Economy, cofinanced by the European Union through the. 23
o The significant trade balance deficit of Germany shows dependence on imports, a factor enhancing additionally the importance of the German market for the Bulgarian manufacturers. Men s and boys suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear) o Main markets are Germany, Italy and Greece. o The main product in this group with the largest export to the leading market Germany is Men's or boys' suits of textile materials, knitted or crocheted, of wool or fine animal hair (excl. tracksuits, ski suits and swimwear). o Main competitors on the leading market are China, Bangladesh and Turkey. o The growing trade balance deficit of Germany (by end of examined period) contributes to increasing the attractiveness of this export destination for the Bulgarian manufacturers. Overcoats, car-coats, capes cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles other than those of heading 6204 o Main markets are Italy and Germany. o The main product in this group with the largest export to the leading market Italy is Women's or girls' anoraks, jackets and similar articles, of synthetic fibres (not knitted or crocheted and excl. suits, ensembles, jacket, blazers, trousers and ski ensembles and swimwear) a product with high level of manufacturing in Bulgaria. o Main competitors on the leading market are China (one of the biggest and established manufacturers worldwide) and Romania. o The trade balance deficit of Italy by this product group along with the growing share of Bulgarian imports on the Italian market determine it as important and perspective destination for the Bulgarian manufacturers. In 2011 and 2012, however, Italy overcomes deficit and has a positive trade balance. In this context, focused efforts are needed to preserve Bulgaria's position on this important market. Women s or girls blouses, shirts and shirt-blouses, knitted or crocheted o The main market of Bulgaria is Greece. o The main product in this group with the largest export to the leading market Greece is Women's or girls blouses, shirts and shirt-blouses, knitted or crocheted (excl. singlets and jackets). o Main competitors on the leading market are FYROM and Italy. of the Bulgarian Economy, cofinanced by the European Union through the. 24
o Although the Greek market is not characterised by high level of dependence on imports of the examined product group, Bulgaria is the main importer there (with a share of 40% in 2012), suggesting that the efforts of the Bulgarian manufacturers should be aimed at strengthening the strong market positions of Bulgaria. Jerseys, pullovers, cardigans, waistcoats and similar articles, knitted or crocheted o Main markets are Germany and Italy, followed by Spain. o The main product in this group with the largest export to the leading market of Italy is Men s or boy s jerseys, pullovers, cardigans, waistcoats and similar articles, of wool, knitted or crocheted (excl. jerseys and pullovers, containing >=50% with article weight >=600 g, and quilted jackets, a product with high level of processing in Bulgaria. o Main competitors on the leading market are China (one of the biggest and established manufacturers worldwide) and Bangladesh. o The increasing total imports of the examined product group in Italy, along with declining exports over the analysed period, make the Italian market perspective for the Bulgarian manufacturers. T-shirts and singlets and other vests, knitted or crocheted o Main markets are Germany, Italy and Greece. o In 2010, the largest Bulgarian export was to Germany, in 2011 - to Italy and in 2012 Germany retook the leading position among the main importers. o Our main competitors on the leading markets are Turkey, Bangladesh and China, which are among the leading manufacturers worldwide, with established traditions in the production of this type of products. o In 2012, Bulgaria ranks 16 th among the main suppliers of T-shirts and singlets, knitted and crocheted on the German market and it accounts for 1,03% of total imports of Germany. Persistently high negative trade balance of Germany shows strong dependence on imports of the examined product group. From this point of view, the German market is perspective for the Bulgarian manufacturers and more efforts should be invested in promoting national production with view to increasing our market share. Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear), knitted or crocheted o Main markets are Italy, Greece and Germany. o In 2012, Bulgaria increased the volume of exports on the leading markets and, respectively, its market share in the total imports of these countries. As a of the Bulgarian Economy, cofinanced by the European Union through the. 25
result, our country retained its positions on these markets - second in Greece and eight in Italy. o Ranking among the leading suppliers of the analyzed commodity group on the Italian and Greek market, and the high volume of imports of these countries (negative trade balance of Greece) determine their primary importance and good perspectives for the Bulgarian manufacturers. o The main product in this group with the largest export to the leading market of Italy is 'dresses of artificial fibers, knitted or crocheted Women's or girls (excl. skirts) - products with a high degree of processing in Bulgaria. o Our main competitors on the leading market are China and France. Trunks, suit-cases, vanity-cases, executive-cases, brief-cases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; travelling bags, insulated food bags o The main market of Bulgaria is Italy - the only one on which we maintain our market share in the period 2009-2012. o The main product in this product group with highest export of the leading market Italy is handbags, whether or not with shoulder straps, incl. those without handles, with outer surface of leather, composition leather or patent leather. o Main competitors on the leading market are China and France. o Both imports and exports of Italy of this product group register growth in 2012 compared to 2006. The growth of export (129%) exceeds import (46%). Nevertheless, the Italian market in general is a promising destination for the Bulgarian producers. Articles of apparel and clothing accessories, of leather or of composition leather o The main market of Bulgaria is again Italy. o The main product in this product groups with the largest export on the leading market Italy is Belts and bandoliers with or without buckles, of leather or of composition leather. o Main competitors on the leading market are China and India. Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather o The main market of Bulgaria in 2012 are Italy, Hungary and France. o The main product of this product group with the largest export to the leading market Italy is Women s and girl s footwear with outer soles of rubber, of the Bulgarian Economy, cofinanced by the European Union through the. 26
plastics, leather or composition leather and uppers of leather, with insole of length 24 cm or more (excl. those covering the ankle, with a protective metal toecap; or a base platform of wood). o Our main competitors on the leading market are Romania and China. o Growing total imports of the analysed product group in Italy over the studied period determine the high level of perspective of this market for the Bulgarian manufacturers, regardless of the small share of the Bulgarian import in total Italian imports in 2012 (2.3%), Parts of footwear (including uppers, whether or not attached to soles other than outer soles); removable in-soles, heel cushions and similar articles, gaiters, leggings and similar articles and parts thereof Other footwear o Main markets of Bulgaria are Italy, France and Greece. o The main product of this product group with the largest export to the leading market Italy is Footwear uppers and parts thereof (other than stiffeners) product with low level of manufacturing in Bulgaria. o Our main competitors on the leading market are Romania, Albania and Tunisia. o The persisting high total volume of imports of the analysed product group in Italy over the studied period, along with the 4 th position and share of 11% of the Bulgarian import in the total Italian import in 2012, determine the high level of perspective of this market for the Bulgarian manufacturers. o The main markets of Bulgaria in 2012 are Hungary and Italy. o The main product of this product group with the largest export to the leading market Hungary is Footwear with uppers of leather or composition leather (excl. with outer soles of rubber, plastics, leather or composition leather and uppers of leather, orthopedic footwear and toy footwear) product with high level of processing in Bulgaria. o Our main competitors on the leading market are Italy and Slovakia. o Bulgarian exports to Hungary remains unchanged over the past three years, and our country is by far the leading importer (30th position). Our ranking in Italy is higher, as in 2012 for instance, by a twice lower value of exports compared to Hungary, Bulgaria occupies the 11th place among importers of this commodity group. The increase in imports in both countries makes them markets with good potential for the Bulgarian manufacturers. of the Bulgarian Economy, cofinanced by the European Union through the. 27
Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials o The main market of Bulgaria is Italy. o The main product of this product group with the largest export to the leading market Italy is Slippers and other house shoe with outer soles of rubber and uppers of textile materials (excl. sports footwear, tennis shoes, basketball shoes, training shoes and the like). o Main competitors on the leading market are China and Vietnam, leading manufacturers worldwide, with established traditions in production. o The increased share of the Bulgarian import in total imports of Italy in 2012 compared to 2006, along with the registered growth of total imports of the examined product group on the Italian market, show that this market is perspective for the Bulgarian export. Traditional markets for sector Manufacture of wearing apparel, including leather apparel; tanning of leather : Traditional markets for the goods produced by sector Manufacture of wearing apparel, including leather apparel; tanning of leather are the EU countries, mainly Italy, Germany, Greece, France, and Spain. Germany, Italy, France and Greece are traditional markets for the products of the sector. These countries rank in top 10 of the biggest consumers worldwide, an argument in favour of their selection for priority target markets of the main product groups in sector Manufacture of wearing apparel, including leather apparel; tanning of leather. Markets with development potential for sector Manufacture of wearing apparel, including leather apparel; tanning of leather : The markets of the EU countries rank first among the potential markets where the Bulgarian products are traded at present and will be traded in future as well. Other markets with big potential are the East Asian markets and the markets of USA and Canada. Estimates of development by 2015 are prepared for each of the analyzed product groups. Simulations of the trend lay on establishing the analytical form of the function through which regularities in the development of exports of each product group in 2001-2012 are expressed, and estimating the values of the parameters of the function used. In modeling exports, linear or logarithmic regression is used depending on the regularities manifested in the output period. Regressions are calculated by using the values for each year, not just in the first and last year of the period. The obtained results are presented on the following figure: of the Bulgarian Economy, cofinanced by the European Union through the. 28
350000 Figure 1. Prognosis for the development of exports by product groups until 2015 300000 250000 200000 150000 100000 50000 Women's or girls' suits Men s or boys suits Women s or girls overcoats Women s or girls blouses Jerseys, pullovers, cardigans T-shirts, singlets and other vests Women's or girls' suits, knitted or crocheted Trunks, suit-cases Wear apparel and clothing accessories of leather Footwear with uppers of leather Parts of footwear Other footwear Footwear with uppers of textile materials. 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: International Trade Centre and own calculations This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 29
CONCLUSIONS: Data on our main markets in the EU show that the export of analyzed product groups is focused mainly on the markets of Italy and Germany both markets are characterized by huge number of consumers, substantiating their perspective from the point of view of the Bulgarian manufacturers. Regarding the predominating part of the analyzed product groups, the main competitors of Bulgaria are China and Turkey, i.e. among our main competitors are big world manufacturers with established traditions, with possibility to use a number of advantages from viewpoints of export, for example cheap workforce (respectively, lower cost end products) and economies of scale. Another important competitor is Romania, due to similar production characteristics and development possibilities with this country. Bulgaria usually ranks among the top importers on the Greek market, which is due mainly to the relatively smaller scale of the market, its geographic proximity to Bulgaria, and the established relationships between the two countries. As a whole, the volume of Bulgaria s export to non-eu countries is quite smaller compared to that of our EU competitors, ranking usually Bulgaria to rear position among the main suppliers. The main reason for working CMT and not developing own collections (trademarks) is the lack of state policy and support for the participation in fairs and shows in order to demonstrate own collections and impose Bulgarian trademarks. The development of own trademark is costly process, time-, funds and human resource consuming. A number of years are necessary in order to establish a trademark on the market and to conquer stable market positions, resulting in profits for the manufacturer. Imposing a particular trademark on the international market means not only to develop a collection, but also serious advertising, including: the organisation of fashion-shows on world platforms, attraction of celebrities for the product advertising, aggressive advertising via all channels (leading world fashion magazines, TVs, etc.). The Bulgarian manufacturers do not dispose of free financial resources to be entirely designed for the development and imposing of own collections. Moreover, they have small production capacity and are not able to meet big orders. Therefore, at present it is more profitable for the Bulgarian manufacturers to work as sub-contractors for leading world manufacturers. The predominating micro, small and medium-size enterprises in the sector would difficultly compete with already imposed world trademarks on foreign markets. SMEs in sector Manufacture of wearing apparel, including leather apparel; tanning of leather The available information for making informed management decisions for supporting SMEs on perspective markets is extremely low. All analysis made for different product groups and markets will remain just an intellectual exercise if no way is found in the of the Bulgarian Economy, cofinanced by the European Union through the. 30
future, including through clearly formulated requirements to the NSI, for providing the necessary information. However, data from the survey of SMEs do not contradict to the analysed priority export destinations the main markets of the companies included in the survey are in EU countries. Main competitors of the interviewed SMEs are companies from China, Romania, Turkey, Italy and France. The main advantages of the EU competitors are related to two principle aspects: first, the production process itself - low prices of competitors products (according to 88% of the respondents) and higher productivity of the competitors; second, the support by the state for export orientated policy - in the range from more general answers to concrete examples. All listed advantages of the competitors should be considered as deficits for the Bulgarian exporters. The competitiveness of the Bulgarian wearing apparel is determined also by the fact that most of the companies in the sector, according to the interviewed representatives of companies with export potential, have clear and well grounded export strategy. Unfavourable factors, leading to lower competitiveness and more limited possibilities for export realization is the low developed research and development activity, the lack of local raw materials, international certificates and own trademark. The findings and conclusions give grounds to expect that in the next five years the Bulgarian export of wearing apparel, including leather apparel; tanning of leather, manufactured by SMEs will grow, although slowly, and at the beginning of the period it will reach the 2009 level, while at the end of the five-year period exports of Bulgarian SMEs in the sector are expected to exceed BGN 1,6 billion. of the Bulgarian Economy, cofinanced by the European Union through the. 31
EXPORT PRIORITY PRODUCT GROUPS IN THE SECTOR AND MAIN MARKETS The analysis of product groups in sector Manufacture of wearing apparel, including leather apparel; tanning of leather allows determining the leading product groups with export priority and the concrete markets. The selection is made on the basis of the following criteria: share in the export of the sector, increasing export in the period 2001 2012, share on the global market and concentration of SMEs in the sub-sector. The graphs interpret the data for the Bulgarian export in 2012. Data used are taken from the International Trade Centre (www.intracen.org). For each of the selected product groups, the main market in 2012 in the EU and out of the EU, the main suppliers and their market share are shown below. Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear) Main EU market GERMANY Main non-eu market TURKEY 2012 of the Bulgarian Economy, cofinanced by the European Union through the. 32
Q1, 2013 Men s and boys suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear) Main EU market GERMANY Main non-eu market TURKEY 2012 of the Bulgarian Economy, cofinanced by the European Union through the. 33
Q1, 2013 Overcoats, car-coats, capes cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles other than those of heading 6204 Main EU market ITALY Main non-eu market SWITZERLAND 2012 of the Bulgarian Economy, cofinanced by the European Union through the. 34
Q1, 2013 Note: Main non-eu market is the Republic of Moldova. There are no data for the first quarter of 2013. Women s or girls blouses, shirts and shirt-blouses, knitted or crocheted Main EU market GREECE 2012 Main non-eu market TURKEY of the Bulgarian Economy, cofinanced by the European Union through the. 35
Q1, 2013 Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear), knitted or crocheted Main EU market ITALY 2012 Main non-eu market USA of the Bulgarian Economy, cofinanced by the European Union through the. 36
Q1, 2013 Parts of footwear (including uppers, whether or not attached to soles other than outer soles); removable in-soles, heel cushions and similar articles, gaiters, leggings and similar articles and parts thereof Main EU market ITALY 2012 Main non-eu market SERBIA of the Bulgarian Economy, cofinanced by the European Union through the. 37
Q1, 2013 It is obvious from the graphs above, that the Bulgarian export of sector Manufacture of wearing apparel, including leather apparel, tanning of leather is almost entirely designed for the European Union, as our main markets are Germany, Italy and Greece. This puts us in a strong dependence on the dynamics of markets in a small number of importer-countries and any more serious shock and shrinkage in consumption in these markets affects extremely negatively the national manufacturers. We have slightly bigger market shares in these countries, which for various product groups vary from 2,5% to 39%, as our best positions are in the groups of knitted and crocheted clothing. The Bulgarian presence on non-eu markets is almost negligible. Possible measures for promoting the export to existing and entering new markets would include: Preparing reports on the condition of respective markets and studies of the consumption of certain products; Support for the participation of foreign visitors (manufacturers and consumers) to Bulgarian exhibitions and fairs; Support for the participation of SMEs in the sector in international and national fairs and exhibitions where the leading manufacturers and importers take part, such as: Footwear fair, Riva del Garda, Italy, The fairs in Düsseldorf and Munich, Germany, PREMIERE VISION, Paris, MICAM footwear and leather articles, Milan; the fairs in Guangzhou and Shanghai (leather and footwear), China; Development and implementation of annual programme of fairs and exhibitions, which are important for manufacturers in the sector; Development of a programme for presenting the manufacturers in sector Manufacture of wearing apparel, including leather apparel; tanning of leather in specialized exhibitions, organized in countries with perspective markets, such as the International leather goods fair Le Show, Moscow; the International fashion fair CPM, Moscow; of the Bulgarian Economy, cofinanced by the European Union through the. 38