EVOLUTION OF ECONOMIC INDICATORS IN THE CLOTHING INDUSTRY: A COMPARATIVE ANALYSIS BETWEEN ROMANIA AND THE EXTERNAL ENVIRONMENT

EVOLUTION OF ECONOMIC INDICATORS IN THE CLOTHING INDUSTRY: A COMPARATIVE ANALYSIS BETWEEN ROMANIA AND THE EXTERNAL ENVIRONMENT AVRAM Teodora Maria (Corresponding Author) Ph.D. Student, Faculty of Science, 1 Decembrie 1918 University, Alba Iulia, România, avram_teodora@ymail.com BOTA Cristian Florin Ph.D. Student, Faculty of Science, 1 Decembrie 1918 University, Alba Iulia, România, bota.cristian.florin@carcreditteius.ro ABSTRACT T he goal of our approach is a thorough study of the achievement of high performance in making financial decisions on trading companies in the clothing industry through economic financial analysis. Another aspect that will be highlighted in the first chapter is the study of the clothing industry in relation to a national and international spectrum of multilateral analysis of the past, present and future. We will also present several hypotheses in order to establish some admissible promotion strategies for the industry in question. The clothing industry is of special importance to Romania, given that the enhancement of the clothing sector is a strategic objective at country level. Although the sector is currently facing significant challenges, it can be said that most investments in the clothing industry are profitable due to the high quality of garments made in Romania, which are mainly exported to Central and Southern Europe. The international repository of the clothing industry includes an extensive presentation, starting from history to the current life of the garment industry. We will mention the main stages of the evolution of the clothing industry worldwide as well as in the European Union. From a steady viewpoint, this evolution can be understood as having significant precedence among other industries. Keywords: clothing industry, economic indicators, comparative analysis, Romania, external environment, promotion EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 109

Introduction This paper presents a study of the evolution of the main economic indicators in the clothing sector. To achieve the goal set out in the article s abstract, we consider that the main objective of this approach focuses on the evaluation of the clothing industry in Romania and abroad, based on a series of secondary objectives: the emphasis of the general aspects of the clothing industry and the presentation of the vision of the lohn system production, the identification of the specificity of the clothing industry in the national and international context, the analysis of the opportunities and strategies for the improvement of the activity of clothing companies. In order to achieve the goal mentioned above, we considered it appropriate to use a series of research methods, from a methodological perspective. The research methods, techniques and procedures used in this preliminary research were: the review of the field literature, where theoretical notions have been dealt with by means of deductive approach. Documentation involved the study of the rich science in the field, and therefore we considered appropriate to consult and report through the list of bibliographic references. Observation was aimed at obtaining further information on the current stage of knowledge, the projection of the instrument used in quantitative research and the formulation of objectives. Collection and primary processing of statistical data, by using graphics, consisted in data mining from statistical yearbooks for data comparison and analysis. In order to understand the tabular data and charts made for a certain period of time, the resulting statistical data have been interpreted in detail. The analysis involved the use of data available from various sources aiming to discover problems, ideas and solutions in order to operationalize research. Synthesis and interpretation of results are outlined in the last part of the report where we present the results of our research in a concise manner. In a comprehensive manner, in our approach based on bibliographical notes and specific elements of originality, we consider that this paper brings some elements of novelty to the field literature through the study of economic indicators of a sector with notable influences in daily life, i.e. the clothing industry. Therefore, the topic addressed required intense and sustained research and documentation. 1. Defining features of the clothing industry In a general scientific sense, dictionaries of the Romanian language define the concept of "garment" as follows: the Explanatory Dictionary of the Romanian Language of 1998 (Romanian Academy, 1998) considers garment as "an item of clothing manufactured and delivered in series or mass" and the New Explanatory Dictionary of the Romanian Language of 2002 (Litera Internaţională, 2002), defines garment as "an article of clothing made in series after a certain model". According to author Ioan Iacob, textile fibres used for clothing can be regarded as "solids of vegetable, animal or mineral origin or produced chemically, whose length exceeds several times the cross-sectional dimension" (Ioan Iacob, 2005, p. 14). With the passage of time, after the clothing business appeared and continually developed, it was necessary to create a specific industry called the clothing industry. This is a diverse and heterogeneous industry which covers a great number of activities from the transformation of raw materials into fibres, yarns and fabrics that in turn enter into the production of e.g. hi-tech synthetic textiles, wool, bed-linen, industrial filters, geo-textiles and clothing and are used in multiple applications, e.g. garments, sports equipment, household, furniture, civil engineering (construction, automobiles and aircraft), and medical textiles. (European Commission. Directorate-General for External Trade, 2011, p. 5) EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 110

Viewed in terms of the process of global approach to the clothing industry, as presented by the European Commission, it results that this industry includes (European Commission s website): textile fibres: o natural fibres, including cotton, wool, silk, flax, hemp, jute; o fibres, including those originating from the processing of natural polymers (for example viscose rayon, acetate or modal), synthetic fibres (for example, organic fibres based on petrochemicals such as polyester, nylon / polyamide, acrylic, and polypropylene) and fibres of inorganic materials (e.g., glass, metal, carbon or ceramic). treatment of raw materials, i.e. preparation or production of different textile fibres and/or manufacture of yarns (e.g., by centrifugation): o production of knitted and woven fabrics; o activities designed to provide fabrics with visual, physical and aesthetic properties for which consumers demand finishing. This includes bleaching, printing, dyeing, impregnating, coating and laminating; o transformation of these fabrics into products including: clothes (knitted or woven); carpets and other textile floor coverings; household textiles such as bed linen, table covers and curtains; technical or industrial textiles. The basic features of the clothing industry, according to the field literature, can be expressed by means of the following factors (Visileanu Emilia, Cărpuş Eftalea, Pătrânoiu Vasile, 2010, p. 3): it hires a significant amount of labour, mainly female; it contributes to social stability because it is represented in all counties; it has a significant share in the export of the national economy; it contributes with a positive balance to the country s balance of trade. In Romania, one of the main business sectors, where lohn production is concentrated (Nicoleta Dorina Racolţa-Paina, Veronica Maria Mateescu, 2006, p. 102.) (also known as "outward processing trade", abbreviated OPT) is the clothing and textile sector (in common language, lohn mostly refers only to this sector, although theoretically lohn can be found in other business areas, being a form of delocalization of production, which can generally be defined as cooperation in production, based on a legal contract between independent companies from different countries (Academic Search Premier 1995, p. 109). At present, Romania is one of the main destinations for clothing companies (multinational companies, large companies and SMEs) in the European Union, which have delocalized much of their own production to countries that offer cheap and (relatively) skilled labour. EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 111

2. Evolution of economic indicators typical of the clothing industry in Romania In the Romanian national economy, the light industry through its three main components (textiles, clothing, and leather and footwear) is an important segment due to its considerable share in the gross domestic product, exports and the large number of employees in them (Adriana Gîrneaţă, Marius Potcovaru, 2015). Nevertheless, the socio-economic and political changes taking place in Romania in the past two decades have affected this sector, which was forced to constantly adapt to changes, which also made the market undergo permanent change (Adriana Gîrneaţă, Adriana Giurgiu, Cosmin Octavian Dobrin, Ion Popa, Doina Popescu, Sunhilde Cuc, Laura Voicu, 2015, pp. 108-113). We notice that the Romanian clothing market is a crowded one, with many strong competitors, particularly Asian companies with cheap and low-quality products. To survive on this market, Romanian clothing companies sought to provide products tailored to well-defined segments of customers. (Marius Bota, Monica Boriceanu, Smaranda Cosma, 2008, p.764). Chart no. 1 Evolution of the main indices typical of the clothing industry in the national context Source: Results calculated according to the data published on www.insse.ro, accessed on 12.02.2016 As a result of consulting the data published on the website of the National Institute of Statistics, we systematized the data obtained from the indices of industrial production, labour productivity, turnover and production costs. It can be seen that the industrial production index decreased by 11.31%, if we compare the year 2000 with the year 2015. Comparing the same years, we note that labour productivity in the clothing sector mostly stagnated, and it only slightly increased and decreased, and turnover indices show an increase of 87.81%; by comparing the current period with the basic period, the same situation of growth in the same periods showed an increase of 71.96%. We emphasize the best period in terms of production, which was in 2003, and the year 2009 was marked by the lowest clothing production in Romania. To synthesise Romania's transition through the period of crisis and continuous decline, we present below the problems that the clothing industry is currently facing: the total liberalization of imports from Asia and especially from China. For Romania, this measure was a double blow. First, the internal market, already suffocated by Chinese goods, will be almost EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 112

impossible to recapture after the elimination of import quotas. Second, Romanian exporters will find it increasingly difficult to retain their traditional outlet market in the European Union whose share is about 85% of clothing exports; the increase of the leu against the euro, which has an immediate effect of reducing income from exports; pressure from trade unions for wage growth has caused great losses because in the industry under review the cost of labour has the largest share in the total manufacturing costs; the increase in the price of utilities increased production costs by 30% ; (Mihai Pasculescu) Romania's accession to the European Union, through the creation of prerequisites for the opening of textile clothing markets and the transfer of lohn contracts to countries with lower labour costs, could lead to the closure of a large number of clothing companies in our country. Over 84% of the companies operating in the clothing industry work on a lohn basis. Most of these companies are small businesses with a few employees and often depend on a single customer; (Ileana Răducanu) lack of labour, and therefore businesses are forced to import raw material necessary for manufacturing; the mandatory condition of return of goods; at the end of the season manufacturers found themselves with an amount of goods returned in poor condition, due to the system of total liberalization of imports; unfavourable exchange rate of the leu against the euro. Another major feature is the high degree of privatization, as clothing and knitwear companies are almost entirely in private ownership (99.8%). The high degree of privatization of the clothing industry has helped to attract massive foreign capital and was reflected in increased investments in modernization and technological renewal of production capacities in those companies. At the end of 2002 this indicator was over 85% and the degree of using production capacities has been consistently high in recent years (over 95%), with no excess capacities (Doina Popescu, 2005, p. 3). The low level of these indicators can be explained by the fact that in this subsector there are still large production capacities, with low flexibility and adaptability to market requirements, with not enough investment and capital funds, as well as a high rate of non-performing machinery and technologies, which ultimately lead to low competitiveness, in terms of price and quality of clothing products, especially in the foreign market. Chart no. 2 Evolution of the number of employees working in the clothing industry in Romania Source: Results calculated according to the data published on www.insse.ro, accessed on 17.02.2016 EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 113

From the data reviewed and from chart no. 2, we notice that the number of people working in the clothing industry show a downward trend. The clothing industry is currently operating with a number of 134.54 thousand people. This unfavourable decrease in the number of workers in this industry has been caused by the lower and lower wages that clothing manufacturers have been willing to offer, and this probably occurred due to a sharp drop in production. Apparently, the emergence of the economic crisis has caused a steady decline in production and loss of markets, which triggered the dismissal of a large number of employees, closure of underperforming companies or companies operating with cheap labour (Irina Eugenia Iamandi, Sebastian Mădălin Munteanu, 2014, pp. 73-97). To cope with increasing competition and market changes, developed countries have made adjustments, and the intensification of research in automated technological processes leads to advancement in automation and robotics (Gordana Colovic, 2012). One aspect to be considered in fostering growth and development of the clothing industry is entrepreneurship (Sebastian Mădălin Munteanu, Irina Eugenia Iamandi, Eugeniu Tudor, 2015, pp. 76-92). Due to increasing competition in the global market, large retailers have resorted to relocation of production in developing countries, whose main advantage is the low cost of labour. As a representative sector, especially for less developed economies that use active trade policies aimed at intensive stimulation of exports as an "engine" of economic growth, the clothing industry is in fact a pillar in the economic development. This is also valid for Romania, because as a result of the studies conducted, we found the important role that the clothing sector plays in the production sector, and it also represents the major share in the country's exports. The clothing industry is one of the few industrial sectors where the export specialization index (Liviu Voinea, 2005, p. 5) of our country is greater than 1. According to a classification made by the magazine Dialog Textil in 2014, with the support of the National Trade Registry, the first on the list is still Benrom Sibiu, which is the leading supplier of the Italian group United Colors of Benetton, according to table no. 1. Table no. 1 Top 10 companies in the clothing industry in Romania Entry Company County Turnover -RON- 1 Benrom SRL Sibiu 303,535,335 2 IC Companys România SRL Bucharest 237,790,127 3 Alison Hayes (România) SRL Urziceni 192,803,791 4 Formens SRL Botoşani 166,090,334 5 Producţie Zarah Modern SRL Târgu Secuiesc 131,526,453 6 Pandora Prod SRL Focşani 128,820,182 7 ArtifexR SRL Focşani 118,434,126 8 Magreb Knitwear East SA Cluj-Napoca 91,211,135 9 Time International Trading SRL Bucharest 89,145,289 10 Eurotex Company SRL Iaşi 82,681,331 Source: Dialog Textil Magazine, www.dialogtextil.ro, the item Top of clothing companies in Romania, accessed on 18.03.2016 We found that although it still ranks first, Benrom s turnover almost halved in 2013 as compared to 2012. Thus, from 590 million RON in 2012, it decreased to 303 million RON in 2013. The second place is held by IC Companys Romania SRL (237 million RON), which we have included here even if it has no actual production, but it acts as an intermediary for contracts with customers in the Scandinavian fashion industry. The third place is held by Alison Hayes Romania, with almost 200 million RON, whose clothing EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 114

production is mainly intended for customers in the UK. The fourth place is held by Formens SRL of Botoşani, a manufacturer of men s clothes. After Italian, Cypriot, French or German investments, we reach to the sixth place which is held by a Romanian manufacturer, Pandora Prod of Focşani, which had a turnover of 128 million RON. One of the companies with the best results is Eurotex Company of Iaşi, which actually doubled its turnover in 2013 as compared to 2012, with a relatively similar number of employees (247 million RON in 2012 as compared to the 303 million RON reported last year). Marius Sandru, manager of Eurotex, said in an interview in Dialog Textil that he invests heavily in creativity and the development of collections for world-class brands. Transilvanian Trousers Company also had very good results, which led to a double-digit growth, from 47.2 million RON in 2012 to 67.8 million RON in 2013. Likewise, Romaniţa Caracal reported an increase from 42 million RON in 2012 to 62 million RON at the end of 2013. Most other manufacturers have had growing businesses, even if not equally spectacular: Formens, Producţie Zarah Moden, Pandora Prod, Sonoma, Biancospino, Magreb Knitwear East, Verso Corporation, Francesca Industries and others. The companies whose businesses have slightly decreased are: Time International Trading (99 million RON in 2012 as compared to 89 million RON in 2013) and Oztasar (81 million RON in 2013 as compared to 92 million RON in 2012), Tanex (62 million RON in 2012 as compared to 58 million RON in 2013), Steilmann Romania (43.3 million lei in 2012 as compared to 40.6 million in the baseline year). We believe that attention can be turned more to the years 2003 and 2004, which were a peak period in terms of clothing exports, as shown in the magazine Capital (Monica Niţă, 2008, p. 22), in an article entitled "Romania was the largest clothing exporter in the European Union, accounting for almost half of the country's foreign trade." In a classification made in 2005, Romania was ranked eleventh in the world's top clothing suppliers, holding 1.7% of the global market. The European Union was at the time, by far, the most important partner of Romania in the clothing trade. With exports of 3.6 billion euro in 2005, Romania held the third position as a clothing supplier for the European Union, after China and Turkey. (Marius Bota, Carmen Gut, 2007, p. 208). A study published by DG Enterprise and Industry at the end of 2012 reveals that among the countries in the European Union, Romania has the largest untapped export potential in the clothing industry, i.e. about 15% of the full untapped potential of the European Union. (WIFI - Austrian Institute of Economic Research, Publisher: European Commission, 2012). Below we present the percentage of the main groups of goods exported by Romania in 2015: EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 115

Chart no. 3 Structure of FOB exports for the main groups of goods in the period 01.01-31.10.2015 Source: National Institute of Statistics, Statistics of international trade in goods based on Community concept, p. 6 In terms of exports, the FOB value is the value of exported goods at the place and date when the goods leave the statistical territory of Romania (the value at which the goods have been sold by the exporter, including transport costs, insurance and other costs for the conveyance of goods to the Romanian border). (National Institute of Statistics, p. 6). Exports of textiles and articles made thereof, placed fifth, had a 1.2% increase as compared to the period 01.01-30.09.2014. In this section, exports of garments and accessories, other than knitted or crocheted, represented 52.3% of the total section and 3.8% of total exports. Moreover, exports of knitted or crocheted garments and accessories represented 17.9% of the total section and 1.3% of total exports. With regard to clothing imports, the situation is as follows: Chart no. 4 Structure of CIF imports for the main groups of goods in the period 01.01-31.10.2015 Source: National Institute of Statistics, Statistics of international trade in goods based on Community concept, p. 6 EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 116

In terms of imports, the CIF value is the value of imported goods at the port of entry into Romania (the value at which goods are bought by the importer, including transport and insurance costs for the conveyance of goods to the Romanian border). (National Institute of Statistics, p. 6). From the chart no. 4, we note that the clothing industry imports somewhat to the same extent as other categories of goods, such as agro-food products (9.4%), means of transport (9.2%), mineral products (7.3%), and other products that accounts for 8.2%. Overall, however, the results of major manufacturers in the local clothing industry clearly show a return in the interest of international retailers for the manufacturing sector in Romania, a trend already confirmed by recent years and not likely to disappear soon. (the website Dialog Textil) Chart no. 5 Evolution of international trade in the clothing industry Source: Results calculated according to the data published on www.eurostat.ro, accessed on 25.03.2016 The current status of exports and imports show an increase of 49.38 million euro in exports and 30.91 million euro in imports, an encouraging fact for our country and for the clothing industry as a whole. In addition, partner countries holding the top ten places for exports in the period 01.01-31.10.2015 (representing 64.2% of total exports) were: Germany (19.9% of total exports), Italy (12.5 %), France (6.7%), Hungary (5.4%), the United Kingdom (4.3%), Turkey (4.0%), Bulgaria (3.3%), Spain (2.9%), Poland (2.7%) and the Netherlands (2.5%). Partner countries holding the top ten places for imports in the period 01.01-05.31.2015 (representing 68.2% of total imports) were: Germany (19.8% of total imports), Italy (10.9%), Hungary (8.0%), France (5.6%), Poland (4.8%), China (4.5%), the Netherlands (3.9%), Austria (3.8%), Turkey (3.6%), the Russian Federation (3.3%). That being said, in terms of the situation presented with regard to the clothing industry, Romania has a position that should be reviewed by the important authorities in order to restore the situation and to increase productivity. EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 117

3. Evolution of economic indicators typical of the clothing industry at international level The core technology of the clothing industry has not changed much as compared with the last century; it is characterized by a progressive system. (Frederick Abernathy, John Dunlop, Janice Hammond, David Weil, 1999) The work is organized so that each worker is specialized in one or more operations. Seen from the point of view of the technological process, the manufacturing of clothing starts from the fabric, which is first cut and then grouped in parts of clothing items, tied up in bundles, assembled and then sewn together. Individual sewing tasks are organized systematically using specialized sewing machines, made for individual tasks. Another aspect considered in the analysis of the clothing industry concerns the stages in the manufacture of garments (Eurostat, p. 80) which comprises several phases. They cover design (styling, prototypes and choice of collections), development (models, supply fabrics) and manufacturing processes (cutting, sewing, pressing and finishing). Innovation not only provides a wider range in the manufacturing process, but it also ensures improvement customization, distribution of ranges of clothing products and applications. The wide range of new clothing categories also lead to the appearance of "intelligent clothing", resulting in entertainment apparel, which has an interface with music products or gaming software, and biophysical clothing to detect threats to health, such as breathing, heart rate, monitoring sugar levels. The clothing manufacturing sector in the European Union has recently been characterized by a large number of small and medium enterprises, which are a key challenge faced by many small manufacturers seeking to develop new products and applications for ease and the capacity to secure additional capital, either from public or private bodies. Our observations at the macro level show that there are a number of factors demonstrating that the clothing industry is affected in the process of economic development. Among them we can list (Jodie Keane, Dirk Willem te Velde, 2008, p. 1): the clothing industry significantly contributes to the revenues of selected countries. The contribution of clothing products to the gross domestic product varies according to the country s objectives. For example, it is up to 5% in Sri Lanka, 12% in Cambodia, and 15% in Pakistan; at the same time, the clothing industry is a dominant source for exports and foreign exchange in many developing countries with low income, such as Cambodia, Bangladesh, Pakistan and Sri Lanka that depend on clothing exports, which account for more than 50% of total production. For instance, it is 80% in Cambodia, and even 83.5% in Bangladesh); in terms of labour, employment in the clothing industry throughout the chain of production, typical of less developed countries with low income if considering total population, is from 35% in lowincome countries, 75% in Bangladesh and 90% in countries such as Lesotho and Cambodia, in the production intervals under review. EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 118

Chart no. 7 Evolution of productivity in the clothing industry in the European Union Source: Results calculated according to the data published on www.eurostat.ro, accessed on 28.03.2016 Statistics on the number of clothing companies and jobs in the clothing industry are uncertain because of the large number of small and informal clothing companies that are not registered. In addition, the closure of companies often results in the development of another company elsewhere or in an increase in the production capacity of an existing company using more efficient machinery and equipment. Unregistered companies employ only a small number of people, and there are many such companies and they account for a significant proportion in the total capacity. These companies are therefore important for the clothing industry, in particular, because they are flexible in terms of their rate of production, working times and wage rates. (Eckart Naumann, 2002). At first glance, chart no. 7 shows that clothing production in the European Union shows a downward trend, going from a percentage of approximately 200% in the year 2000 to below 100% in the current period, the year 2015. However, the production cost remained constant, it even increased slightly. This is not quite gratifying, because generally a decline in production would also require a price reduction in order to redress the existing situation. We note that most clothes were produced in 2000, when there was also the highest turnover percentage, i.e. 136.32%. However, the present, the year 2015, brings about a phenomenon of drastically reduced production, which should be considered by investors in the clothing industry for the recovery, growth and development of the sector. The clothing industry is very important for some countries, in terms of trade, gross domestic product and employment, which significantly contribute to a country s level. The clothing industry provides opportunities to diversify their exports and expand them among low-income countries, which may provide some advantages in terms of labour costs, filling emerging niches and meeting buyer requirements. EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 119

Chart no. 8 Percentage ranking of companies in the clothing industry based on the number of employees Source: Results calculated according to the data published on www.eurostat.ro, accessed on 02.04.2016 In a classification of clothing companies, out of a total of 100%, we can see that in the period under review, in the European Union more than 80% of companies operate with a low number of employees, i.e. less than 9. We would like to emphasize that in 2013, which is the last year displaying such data on the website Eurostat.ro, there were 107,143 clothing companies, 400 of which were operating with more than 250 employees. To view and to get an idea of the pace of production of garments, we have abstracted, from the website Eurostat, the production obtained in different years: Table no. 3 Evolution of production in various countries in the European Union -%- Year Country 2000 2003 2006 2009 2012 2015 Belgium 181.41 177.15 142.65 104.00 87.70 75.97 Bulgaria 71.54 129.12 160.53 107.81 94.54 95.51 Czech Republic 253.38 182.21 136.66 105.75 90.93 90.18 Denmark 360.84 258.36 215.94 94.95 90.18 81.05 Germany 273.93 195.34 148.48 100.09 89.46 87.00 Estonia 148.65 173.45 163.22 94.49 121.64 100.52 Greece 314.42 260.22 189.76 130.12 71.63 54.70 Spain 255.82 180.88 154.72 111.22 85.93 77.75 France 814.19 411.12 239.43 113.86 97.87 92.23 Italy 94.57 85.35 85.50 95.93 85.81 76.68 Latvia 115.85 139.29 151.64 86.77 129.17 92.49 Lithuania 142.84 161.72 141.38 82.89 118.03 139.44 Hungary 246.76 259.78 205.17 114.13 97.30 88.68 Austria 151.05 129.11 125.79 103.41 77.94 68.38 Poland 137.66 124.71 116.18 97.68 109.18 114.91 Portugal 146.90 135.58 118.32 99.76 98.35 107.18 Romania 210.76 239.46 194.98 101.71 101.00 101.33 Finland 185.11 144.50 123.40 95.23 91.91 67.11 United Kingdom 152.20 119.55 110.39 96.81 104.00 102.76 Norway 266.16 170.37 134.94 121.75 89.88 81.06 Former Yugoslav Republic of Macedonia 218.28 150.87 173.02 104.96 103.65 131.48 Source: Results calculated according to the data published on www.eurostat.ro, accessed on 02.04.2016 EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 120

Textiles and garments play a major role in the development and industrialization of countries and their integration into the world economy. The World Trade Organization (2006) found that in 2004, developing countries or grouped as low and middle income countries accounted for more than half of the total world exports of textiles and garments. From the data provided by Table no. 1.3, we conclude that the most important country dealing with manufacturing of garments seems to be France (814.19% reached in 2000), exceeding by far the rates of other countries and even of France in the following periods. The average of the production of the countries reviewed in table no. 3, as well as the production per year, would be about 142.29%. Europe is the largest clothing importer in the world, holding more than 45% of world imports. In terms of clothing exports, the European Union ranks second after China when considering the intra-eu trade. As one could guess, China is much more important in terms of clothing as compared to textiles. Total world exports of clothing from China increased from 14.6% in 1990 to 23.7% in 1998, while Europe's quota fell from 10.5% to 8.8%. (L'Observatoire Européen du Textile et de l'habillement (OETH) A Report on Textiles, 2000) Chart no. 9 Evolution of clothing exports and imports from/into the European Union Source: Results calculated according to the data published on www.eurostat.ro, accessed on 09.04.2016 With regard to clothing exports and imports from or into the European Union, this time we see that both exports and imports show a continuous growth which is favourable for Europe. From 2000 to 2014, EU clothing exports increased so much that they doubled, and the same thing happened in terms of imports. From the studies reviewed (Mike Morris, Justin Barnes, 2006), we can say that in 2004 exports of clothing and textile products worldwide were valued at $ 452,800,000,000, making them some of the most traded manufactured products in the world (World Trade Organization, 2005). Moreover, exports increased at a compound annual rate of 6.6% between 1990 and 2003. Currently, the United States of America, the European Union and Japan are the largest clothing consumers, but most clothing items in these countries are imported. In 2003, Japan Textiles Importers Association estimated that 87% of clothes on sale in Japan are imported, whereas between 1995 and 2002, the US share in world imports of clothing products increased from 14% to 21%. (Mike Morris, Leanne Sedowski). EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 121

Although the clothing industry was created in the United States of America, currently a considerable part of the clothing industry operates in the European Union, particularly in Southern Europe. 4. Strategies for the promotion of the clothing industry The action plan on the competitiveness of the European textile and clothing industry is aimed at solving the major issues facing the industry, and it identifies four priority areas for the promotion of the industry (Carmen Iancu, 2006, pp. 539 540): facilitate structural adjustment, through innovation, research and technological development and strengthen interaction between all stages of the textile and clothing industry, by using electronic means; improve the functioning of the single internal market, by improving regulations on the free movement of goods, at the same time ensuring that potential environmental and health risks for workers and consumers are effectively controlled; improve employment and training conditions; enhance external relations, by widening the access to third country markets and protection against unfair competition. A cutback in spending due to the economic crash has created a class of consumers who want to save more money and buy cheaper products. This does not bode well for the apparel industry, and gives them a poor future outlook, as they are dependent on consumers wants and needs. Higher-end apparel companies, such as Coach and Jos. A. Bank, have already begun producing lower cost lines or offering products at a steep discount. Even the cheaper apparel manufacturers will be affected, as they too will have to reduce prices on their products or engage in sales promotion in order to entice new consumers and retain old ones. (website EDGE Global). The factors that differentiate production in the European Union from competitors, apart from price, include: - the quality of production, defined by the high technical quality of products and their fashion content; - the ability to develop brands with a strong image, due to a combination of tradition, promotion and marketing; - fast, flexible and reliable distribution; - sustainability and security of industrial systems both in relation to the environment and to the employees; (European Commission, 2003) - reduced attractiveness for the processing activity due to the increase of the national minimum wage; - the new banking policy; - uncertain prospects of development of the raw material base; - the need for urgent implementation, by economic operators, of European standards concerning quality, the environment, society, occupational safety and decent work in order to be able to further sell products on the European Union markets, the US and so on; (Traian Deleanu, 2015, p. 9) - the potential of a company in a particular area; - opportunities for further market expansion; EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 122

- planning of employment through increased relevance in occupations with high technological level; - promotion of clothing through as many media as possible; - higher added-value activities which are less sensitive to competition with other countries (e.g. clothing products for the luxury segment of the market, introduction of new fashionable materials or products); - new organizational solutions in the industry and new management techniques, requiring new knowledge, skills and IT tools. (TECLO Textiles & Clothing Knowledge Alliance, 2015 p. 11) These differentiating factors come from the features of the European light industry, including: quality management, highly skilled labour, innovation ability, efficient industrial organization, including modern information and communication technologies. The European Commission (2003) recommended a number of areas that could be considered as industrial policy measures used in order to support and protect European manufacturers in the clothing industry. They refer to: - research, development and innovation; - making education and training more accessible to SMEs through procedures, dissemination of information and coordination; - development of networking potential; - labelling procedures for access to the European Union, certifying that products imported into the EU meet international environmental and labour standards; - fight against counterfeiting, adoption of new measures to protect industrial and intellectual property, strengthening of joint customs control; - the labelling "made in Europe" for promotion of European quality and products. Besides the promotion strategies mentioned, the European Leather Association, COTANCE, in 2005 requested the introduction of certificates of origin for all imported products, specifying the country where each product component was made, as well as the introduction of a labelling system mentioning the compliance to European standards. We think that the most important recommendation in the promotion of clothing industry seems to be the one concerning the new labelling procedures. These could be non-tariff barriers on imports from Asian countries, on the one hand because it is known that in many of those countries international standards of environmental protection and work safety are not met, and on the other hand additional costs (from adjustment costs of to labelling costs) are introduced for manufacturers in Asian countries. (Liviu Voinea, 2005, pp. 24-25) In addition, education is essential for the development of the sector under review, and technical universities and educational institutions that provide training programs in textiles and clothing play a decisive role. There is a close link between the degree of skill use and the productivity of a company, in the sense that employees are not sufficiently involved in the business, their creativity not being developed, and their skills remain unimproved. Continuing education is needed if one aims at the maximization of a company s profit and training courses must be designed according to the needs expressed in the company's strategy. (TECLO Textiles & Clothing Knowledge Alliance, 2015 p. 11) These recommendations made at international level are of great interest for Romanian companies, too. Since its accession to the European Union, Romania has been applying these recommendations so that any EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 123

protection of European trade is not against our country anymore, it is in our favour and this came along within a short time. Romanian manufacturers have concluded that, since its accession, our country is no longer part of the problem for the European Union, but it is part of the solution for the development of the clothing industry. Currently, any problem of Romania will be also the problem of Europe and EU problems will be at the same time Romania's problems. (Liviu Voinea, 2005, pp. 24-25). Although the clothing industry in Romania was developed, since its accession to the European Union, we found that there is currently a lack of a market in the Romanian language for native clothing, too many products being manufactured so that the domestic market cannot absorb them. Experts argue that if a merchant does not have a network of shops, the price of products cannot be adjusted according to the market conditions and a product that does not sell cannot be withdrawn. (Marius Bota, 2009, p. 107) Romanian clothing companies must adapt to product offerings, taking into account customers needs and specific wishes and competition characteristics. From a study presented by Bota Marius, Cosma Samandra Adina and Fleşeriu Cristina, we conclude that the most important suggestions from customers to improve clothes manufactured in Romania refer to (Marius Bota, Samandra Adina Cosma, Cristina Fleşeriu, 2012, pp. 29-30): improve design; make as many models as possible; manufacture all measures; adapt products to current fashion trends; improve the quality of materials; improve the quality of execution. (Marius Bota, 2009, p. 107) That being said, we infer that there is a fierce competition between clothing companies that must differentiate from other companies by using more and more efficient marketing tools. Romanian companies must adapt their offer, taking into account customers needs and specific wishes in the market. Moreover, we think that the solution for clothing companies to start manufacturing would be to create a brand of their own, and this could only be a matter of time, as it takes time for a brand to make its mark on the market. (Carmen Iancu, 2006, pp. 539-540) 5. Conclusions In this paper we presented a detailed analysis of the clothing industry by capturing the national context, and also the international context, in a systematic approach based on several categories of indicators and issues. In our quantitative analysis carried out in time and space, we highlighted several key elements that we consider defining for the industry, while also noting problems and possible strategic directions of policy development in the sector. The importance of the research is results from the topicality of the issues addressed, given that the clothing industry can be a real engine of the national economy and much more than that. Regardless of the competitive environment to which we relate, domestic or international, the reference common to all economic systems is a constant desire to increase competitiveness. The desire for growth and survival of entities in the clothing industry has been fed at the same time by the difficult competitive situation of the Romanian economic environment in recent years. EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 124

The need for scientific research in the clothing industry is all the more acute as the effect of its implementation is obvious today all over the world. The clothing industry has been and is still an engine of continuous development, which is processed on a large scale, because now the entire world population needs clothes, which are made as a result of textile processing and subsequently of apparel fabric processing. As we have made a comparison between the clothing industry in Romania and in the West, we presented a substantive analysis, pointing out several items related to the economic development of the clothing industry in Romania and the external environment, according to several criteria. We concluded that the situation of the industry is about the same in Romania and the international environment, in the sense that in both environments the clothing production has significantly decreased during the 10 years examined, i.e. from 2010 to 2015. Another economic indicator showing a decrease is the one concerning workers wages, which had a downward trend, and the prices of clothes made in Romania increased more than three times in the period under review. However, at international level, the situation is better because clothing prices remained stable. Nevertheless, we noticed that the evolution of imports and exports this time shows a favourable situation because they follow a permanent upward trend, and this is most likely due to articulate, well-defined marketing policies. The last paragraph shows some suggestions for the promotion of the industry reviewed in order to improve the current situation. Due to the precarious situation that we have found, we believe that the best proposals refer to the creation of a detailed national strategy for the development of the clothing industry, through the collaboration of all decision makers in the sector, taking into account the strengths and weaknesses, opportunities and threats in the sector; stimulation of investments in the Romanian clothing industry by the Romanian Government through tax relief measures; self-assessment of entities in the sector by means of rigorous performance analyses. EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 125

Bibliography: 1. Abernathy Frederick, Dunlop John, Hammond Janice, Weil David (1999). Lean Retailing and the Transformation of Manufacturing Lessons from the Textile and Apparel Industries, Oxford University Press. 2. Romanian Academy, Iorgu Iordan Linguistics Institute (1998). Explanatory Dictionary of the Romanian Language, 2nd Edition, Univers Enciclopedic Publishing House. 3. Academic Search Premier (1995). Outward Processing Definitions and Concepts, Economic Bulletin for Europe, Vol. 47. 4. Bota Marius, Boriceanu Monica, Cosma Smaranda (2008). The Segmentation of the Romanian Clothing Market, University of Oradea Annals, Ştiinţe Economice Series, Vol. IV, TOM XVII. 5. Bota Marius, Cosma Samandra Adina, Fleşeriu Cristina (2012). Marketing Mix Analysis for Romanian Clothing Market, (magazine) Revista Economică, Marketing, Commerce and Tourism and a New Paradigm of Change, Supplement, No. 3. 6. Bota Marius, Gut Carmen (2007). The Employment Situation in SME in the Romanian Textile and Clothing Industry, Studia Universitas, Negotia Series, No. 1, Cluj Napoca. 7. Colovic Gordana (2012). Strategic Management in the Garment Industry, Woodhead Publishing, India. 8. European Commission (2003). Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: The future of the textiles and clothing sector in the enlarged European Union, Brussels. 9. European Commission (2003). Economic and Competitiveness Analysis of the European Textile and Clothing Sector, Brussels. 10. Deleanu Traian (2015). Competiveness of the Romanian Textile/Clothing Industry, PERFECTLINK Program with PHARE funding. 11. European Commission. Directorate-General for External Trade (2011). Textile and Clothing Sector and EU Policy. 12. Eurostat, European business - Facts and figures, Textiles, clothing, leather and footwear. 13. Gîrneaţă Adriana, Giurgiu Adriana, Dobrin Cosmin Octavian, Popa Ion, Popescu Doina, Cuc Sunhilde, Voicu Laura (2015) Performance Management Practices in Romanian Textile and Clothing Companies, Industria Textila (Textile Industry), Vol. 66, Nr. 2. 14. Gîrneaţă Adriana, Potcovaru Marius (2015). The Influence of Organizational Culture in Increasing the Performance of Textile and Clothing Companies, The 4th Multidisciplinary Academic Conference in Prague, Czech Republic, Proceedings of The 4th MAC 2015. 15. Iacob Ioan (2005). General Engineering in the Textile and Leather Industry, Performantică Publishing House, Iaşi. 16. Iamandi Irina Eugenia, Munteanu Sebastian Mădălin (2014). Corporate Social Responsibility through Education and Sport. An EU Comparative Case, The Romanian Economic Journal (REJ), Nr. 54. 17. Iancu Carmen (2006). The Impact of Romania's Accession to the E.U on Lohn Companies, as regards Ready- Made Clothes, Danubius University, EIRP Proceedings, Vol. 1. 18. National Institute of Statistics (2015). Industry Statistical Bulletin, No. 11. 19. Keane Jodie, Willem te Velde Dirk (2008). The Role of Textile and Clothing Industries in Growth and Development Strategies, Final Draft Investment and Growth Programme Overseas Development Institute. EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 126

20. Litera Internaţională (2002). New Explanatory Dictionary of the Romanian Language, Litera Internaţională Publishing House. 21. L'Observatoire Européen du Textile et de l'habillement (OETH) A Report on Textiles (2000). Clothing, Footwear A World Employer, based on the WTO statistics, Brussels. 22. Marius Bota (2009). The Romanian Clothing Market, Studia Universitatis Babeş-Bolyai, Negoţia, LIV, 3. 23. Morris Mike, Barnes Justin (2006). Globalisation, the Changed Global Dynamics of the Clothing and Textile Value Chains and the Impact on Sub-Saharan Africa, Draft chapter in Memedovic (ed), Global Value Chains and Production Networks: Prospects for Upgrading by Developing Countries, Vienna, UNIDO. 24. Morris Mike, Sedowski Leanne, The Competitive Dynamics of the Clothing Industry in Madagascar in the post-mfa Environment. 25. Munteanu Sebastian Mădălin, Iamandi Irina Eugenia, Tudor Eugeniu (2015). Evaluation Model of the Entrepreneurial Character in EU Countries, Amfiteatru Economic, No. 17(38). 26. Naumann Eckart, Background Report on the Clothing Industry in the Western Cape Province of South Africa, produced for Wesgro, 2002. 27. Niţă Monica (2008). (magazine) Revista Capital, No. 46, 2008, p. 22. 28. World Trade Organization (2005 and 2006). 29. Pasculescu Mihai, Senior Vice President of FEPAIUS. 30. Popescu Doina (2005). The Light Industry in Romania: European Economic Integration, ASE Publishing House, Bucharest. 31. Racolţa-Paina Nicoleta Dorina, Mateescu Veronica Maria (2006). Internal Social Responsibility and Lohn Production. A Case Study: A Small Enterprise, with Foreign Capital, in the Clothing Industry, Management & Marketing, Nr. 3, Economical Publishing House, Bucharest. 32. Răducanu Ileana, The Impact of Romania s accession to the EU on the Textile, Leather and footwear Trade, ASE Publishing House. 33. The European Commission s website, www.ec.europa.eu, the item Textiles and clothing in the EU, accessed on 16.02.2016. 34. Dialog Textil website, www.dialogtextil.ro, the item The Top Clothing Companies in Romania, accessed on 17.03.2016. 35. The website Eurostat, www.eurostat.ro The website Global EDGE,www.globaledge.msu.edu, the item Apparel and Textiles: Background, accessed on 21.03.2016. 36. TECLO Textile & Clothing Knowledge Alliance, The Decalogue for textiles and clothing SMEs, Erasmus + Programme of the European Union, 2015, p. 11. 37. Visileanu Emilia, Cărpuş Eftalea, Pătrânoiu Vasile (2010). Apparel and Textile Industry A Strategic Direction for the Development of a Sustainable Society, Supplementary AGIR Bulletin, No. 1. 38. Voinea Liviu (2005). GEA Research Report Forced Restructuration: Hard Times for the Light Industry Contribution to the Update of the Strategy for the Textile, Clothing, Leather and Footwear Industry in the Context of a Decrease in the Lohn Production and the Need to Reinvigorate Primary and Resource Industry for the Period 2005-2008, Applied Economy Group. 39. WIFI Austrian Institute of Economic Research, Publisher: European Commission (2012). The Development of Productive Structures of EU Member States and Their International Competitiveness, DG Enterprise and Industry. EUROPEAN JOURNAL OF BUSINESS AND SOCIAL SCIENCES 127