Global Arab Network | ‘Think textiles, think Tunisia’

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‘Think textiles, think Tunisia’

Global Arab Network - David Morgan

Wednesday, 17 June 2009 17:29

Thanks to its assets in terms of quality, competitive costs, flexibility, responsiveness, just-in-time delivery and respect for social and environmental standards and norms, the Tunisian textile and clothing sector offers all-encompassing solutions and a new dynamic for win-win cooperation with partner countries, says CEPEX, the Tunisian Export Promotion Centre, a government institution operating under the aegis of the Ministry of Trade and Handicraft.

The sector occupies a strong and increasingly growing position within the Tunisian economy with 2100 firms employing more than 200,000 people, 83 % of which are totally exporting companies.

Tunisia’s textile sector posted a 274. 2% growth in foreign direct investments (FDI) during the first three months of 2009, the government in Tunis reported in May.
The figure is in comparison with the same period in 2008.
The news was announced by Mr Khaled Touibi, the director general of textile and clothing within the Ministry of Industry, Energy and Small and Medium Enterprises.

The volume of FDI in the sector increased from 7.2 million dinars in 2008 to 25 million dinars, he said.
The growth is essentially due to a substantial investment of 19.8 million dinars by the company Teinture et Finissage Mediterraneen. The investment, which took place in January 2009 in the Tunisian governorate of Ben Arous, has enabled the direct creation of some 61 jobs, Tunisia Online reported. The second major investment in the sector came from French company Damart, which recently selected Tunisia to centralise its production units.

Meanwhile, in 2008, exports of the sector recorded a growth rate of over 8%. More than 96% of exports went to European Union markets, mainly France, Italy, Germany and Belgium. Exports to the UK doubled in value between 2000 and 2008, according to official Tunisian figures.
Tunisia exports of textiles, mostly garments, are estimated to be worth $4.7 billion annually. The country offers zero duty access to the EU on condition that its units use domestic fabrics or fabric exported from the Union. It had a strong garment industry and planned to establish processing units.

The industry has been going through a period of transformation since the ending of the multifibre agreement (MFA) in 2005 ushering in an increasingly globalised trading environment. Firms have been forced to adapt to new market conditions in order to stay among the top producers of textiles in the face of fierce competition from Asian manufacturers.
Tunisian textiles specialists have responded by embarking on new methods of management and market positioning to cope and survive in this new environment.

Co-contracting, instead of subcontracting, and the specialisation in higher end products geared towards customers in European markets has become one option. Leading brands are now prepared to consider relocating production in Tunisia which can offer high value-added production and finishing.

The country’s location has given it an edge over Asia by allowing it to deliver special and small orders in good time and in fact, some Asian firms have been looking at locating in Tunisia in order to gain access to EU markets.

At less than a two-hour flight from major continental European cities, Tunisia has seven international airports throughout the country and some 100 foreign airlines offer more than 1,300 weekly flights to Europe. The country also possesses six commercial ports and a modern maritime fleet that meet the requirements of safety and rapidity for regular service to Europe’s major ports.

Tunisian firms specialise in certain niche products that require specific production techniques and are able to fulfil guarantees of quality.
The country’s competitive position is reinforced by numerous international agreements it has concluded with countries worldwide such as that with Turkey on the rules of origin and its close association and free trade agreement with the EU. Its trading position is further strengthened by bilateral agreements instituting a progressively free trade zone with several Arab countries, and agreement with EFTA countries.

The open business environment in the country also proves attractive to investors in its textile and clothing industries. Foreign investors can hold up to 100% of capital in an undertaking without authorization. They are free to repatriate profits and proceeds from the sale of capital originally acquired with foreign currency, including corresponding gains.

Procedures for setting up a business are simple and can be carried out at the one-stop shop at the Industry Promotion Agency (API) where representatives of the relevant administrations are available.
The investment incentives code grants advantages in the area of exemption from taxes and levies as well as investment subsidies and premiums.

In addition, Tunisia’s modern infrastructure helps facilitate access to major markets. Plans are under way to create a technopark devoted to textiles and clothing in the region of Monastir and to develop specialized industrial zones in finishing as well as a waste water purification plant in the region of Tunis.

In 2008, Tunisia came in fifth place among suppliers to the EU, but was the second top supplier in swimwear, third in denim trousers and work clothes and the fourth in woven trousers.

Under the impact of the MFA, Tunisia’s exports to the EU countries initially declined, but the trends are now upwards as the local industry started to specialise and more companies are now looking to the country. Main international brands now sourcing from Tunisia include: ADIDAS, ARMANI, BALMAIN, BARBARA, BENETTON, BURBERRY, CACHAREL, DIESEL, DIM, SARA LEE, SIMONE PERELE, VAN LAACK, H&M, HUGO BOSS, LACOSTE, MARKS & SPENCER, GAP, YVES SAINT LAURENT, ZARA, NEXT, JOHN LEWIS, FACONABLE, H&M, HUGO BOSS, LEE COOPER, TRIUMPH, RALPH LAUREN, TIMBERLAND, WANDERBRA, WRANGLER.

A recent issue of French daily Le Figaro reported that "in an unstable economic environment, the proximity is growing as a guarantee of security for the big European textile brands. As the end of quotas on imports of Chinese textile products caused a clear setback for the Mediterranean countries which are historically the major producers, transportation costs, rising dollar and the general context of crisis, are beginning to favour them.”

French firm Galeries Lafayette is expected to relocate in North Africa by opening 13 000 m2 a store in Casablanca, Morocco, following a long absence, it is reported. As it used to make 95% of its products in Asia, Galeries Lafayette now wants to rebalance its supply between Asia and the Mediterranean. “We are currently looking into these countries for plants that can come up with fashion products that are sophisticated and high value added, but in short series,” explained Michel Roulleau Galeries Lafayette Deputy Manager. “Pushed by Zara or H & M, we will return to closer suppliers. We need to be more responsive."

Carrefour confirmed this trend. “I cannot expect the turnover I am going to make in a year,” says Jean-Daniel Gatignol, Carrefour textile department manager. “In this context, I will not order my full series in Asia. I will be committed to do it up to 60% and the rest will be done through small series in the Mediterranean. Décathlon or H & M are already doing this very well."

Furthermore, Tunisia is seen as attractive to firms outside Europe seeking to gain market access for their products in the large EU market. With this in view, an Indian trade delegation visited Tunisia recently to explore industry-level cooperation in textiles, The Hindu newspaper reported on 22 March 2009.

One Indian delegate said about 65 per cent of India’s fabric exports were grey fabric and a substantial quantity went to the European Union. Tunisia also imported grey fabric and yarn from India. Tunisia is looking to industry operators from countries such as India to explore investment, including joint ventures, in the processing segment and offered a package of tax benefits and incentives to investors.
The main advantage in this respect is access to the European market, The Hindu newspaper continued. It reported that after holding meetings with officials from Tunisian investment and export promotion organisations, the Indian delegation invited an industry team from Tunisia to visit India to discuss the business opportunities directly with potential investors there.

The country’s TEXMED Euro-Mediterranean garment exhibition was held in the capital Tunis from 10th to 12th June, offering an opportunity for foreign companies to discover the potential of the Tunisian clothing and textiles sector. With more than 250 exhibitors, TEXMED Tunisia 2009 showcased the country’s diversified and dynamic textiles industry. The Arab-British Chamber of Commerce led a UK trade mission to the exhibition.

Global Arab Network

* David Morgan, Editor of "Economic Focus”,magazine. An earlier version of this report appears in the Spring issue of “Economic Focus”.

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