Several fashion retailers have been in contact with Turkish firms to move their manufacturing operations from coronavirus-hit China to Turkey, with the initial investment estimated to bring in as much as $2 billion, Reuters reported on 7 February. The order also is shifting to Bangladesh and Vietnam.
Around 900 people have now perished in mainland China from the Coronavirus. This world health emergency situation has greatly affected the manufacturing industries including textile and apparel manufacturing in China and Chinese exports of goods are declining.
According to recent data, the amount of cargo transportation carrying Chinese products has significantly decreased. Slowing down the production or in some cases, many factories suspended operations for several days to stop the spread of the virus.
Polish fashion retailer LPP has said it is in talks with factories in Turkey, Bangladesh opportunities and Vietnam as a backup plan if Chinese production delays continue.
T. Rajkumar, Chairman of the Confederation of Indian Textile Industry, said, “Countries such as Bangladesh that are strong in garment exports may also face challenges as they import raw material. For Indian exporters, the entire textile value chain is available. They should reach out to buyers and tap opportunities.”
“The sector has the capacity to take on additional orders as both new and existing clients increasingly contact Turkish factories.”
Turkish manufacturers have in recent years shifted their clothing production up-market as China’s dominance grew globally. But the outbreak has sent some European companies back to Turkey, Polish fashion retailer said.
“Purchasing managers and designers can’t go to China due to coronavirus worries and travel restrictions. So several well-known brands started discussions for production of new seasonal items in Turkey,” said Hadi Karasu, head of Turkish Clothing Manufacturers’ Association (TGSD).
Rising Chinese manufacturing costs and a 36% slide in the value of the Turkish lira in the last two years, on the back of a currency crisis in 2018, has already made Turkey an affordable option, Karasu added.
“As manufacturing costs leveled between China and Turkey, some European firms were (already) considering shifting orders towards here,” Karasu said.
“China has some $170 billion ready-to-wear exports. According to our calculations, some 1% of orders will (now) be shifting to Turkey initially which could amount to $2 billion,”
Turkey exported some $17.7 billion ready-to-wear products last year. Any rise could help the import-heavy economy keep a lid on its current account deficit and hit the government’s ambitious 5% economic growth forecast this year.
Mustafa Gultepe, head of the Istanbul Apparel Exporters’ Association (IHKIB), said the sector has the capacity to take on additional orders as both new and existing clients increasingly contact Turkish factories.
“There are clothing retailers asking around for prices and products in Turkey after the coronavirus outbreak,” Gultepe said.
“I think the impact of the outbreak will continue for 5-6 months and I think there will be a major shift from China that we will see after May,” he added.