Post on 27-Jan-2020
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ROMANIA - COUNTRY REPORT
JUNE 2005
This document has been produced with the financial support of the European Community’s BSP2 programme. The views expressed herein are those of the authors and can therefore in no way be taken
to reflect the official opinion of the European Commission
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TABLE OF CONTENT
PAG. GENERAL VIEW ON ROMANIAN LIGHT INDUSTRY 3
1. ANALYSIS OF NATIONAL STATISTICS 6
1.1. TEXTILE SECTOR 6
1.2. LEATHER SECTOR 8
2. NATIONAL QUESTIONNAIRES SURVEY RESULTS 11
2. 1. TEXTILE SECTOR
2.2. LEATHER SECTOR
3. SWOT ANALYSIS OF ROMANIAN LIGHT INDUSTRY
3.1. STRONG POINTS
3.2. WEAK POINTS
11
17
20
20
21
3.3. OPORTUNITIES
3.4. THREATS
4. COMPARISON WITH OTHER COUNTRIES SURVEYED
5. THE EUROPEAN FRAMEWORK: THE EUROPEAN COMMISSION
SUPPORT POLICY AND PROGRAMMES
6. GOVERNMENT PLANS FOR SUPPORTING LIGHT INDUSTRY
7. CONCLUSIONS
21
22
23
24
28
29
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ROMANIA - COUNTRY REPORT
GENERAL VIEW ON ROMANIAN LIGHT INDUSTRY
The light industry (textiles – clothing – leather / shoes industry) is representing one of the
most important and dynamic sectors of Romanian economy being represented almost all over
the country and contributing in a positive way to Romanian exports.
In 2004, Romanian light industry (textiles – clothing – leather / shoes industry) has realised
the following indicators:
� 5,5 % from GDP;
� 10 % from industrial production volume of Romania;
� 35 % from Romanian export;
� 19 % from Romanian import;
� 20,4 % personnel from industry is working in this field (about 450 000 employees);
� 8900 companies are working in this domain (7211 textiles and 1731 leather);
� 97% from industrial production and 98% from export are realized in the private
sector of light industry.[1]
Romanian light industry is using most of raw materials from import, the added value of its
products is still low and the salaries of its personnel are ones of the lowest; but despite all of
these our light industry is important for the industrial sector, having a positive trend
(beginning with 1996) for production volume – Figure 3 – and a permanent positive
export/import balance – Figure 4.
Figure 1
Romanian Production Structure
2004 Textile
22.3%
Apparel 62.5% Leather &
Shoes 15.2 %
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Romanian Light Industry Product Destination
Figure 2
Evolution of Romanian Light Industry Production
Figure 3
1989Export
25.80%
Intern74.20%
4207
56364921
7223
3723,5
5000
8170
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1989 1996 2000 2001 2002 2003 2004
mil.
$2004
Export 85.3%
Intern 14.7%
5
Evolution of Light Industry import and export
Figure 4
The raised export value of light industry may be attributed to the following product groups:
� shoes and other accessories;
� textiles and textile goods.
Apparel sector is the most important from the point of view of export value; but as shoe sector
too, is still producing in lohn system (about 70 - 80%).
As export partners, on the first place there are EU 15 countries; in 2003 about 50% of light
industry products have been exported to: Italy, Germany, France, UK and Turkey. In the last
years, Romania has tried to penetrate new markets in the Former Soviet Countries.
Imports have also raised (but they are under export value) due the raw materials necessities
like: cotton, wool, raw hides/skins, chemical fibres and yarns.
In the last years the “champions” are clothes and shoes sectors. They are competitive due to
well skilled personnel with lower salary as in other European countries, modern equipment
and flexibility. Textiles and leather sectors are also in a development period but they still need
more investments funds for modern equipments and ecological
6973
6070
48074050
3342
22291332652
19352623
31353717
4524
5135
0
1000
2000
3000
4000
5000
6000
7000
8000
1989 1996 2000 2001 2002 2003 2004
mil.
$
Export Import
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1. ANALYSIS OF NATIONAL STATISTICS
1.1. TEXTILE SECTOR ATEROM has collected and analyzed the statistical data concerning the yarn, fabric and clothing imports of Romania coming from more than 25 countries plus the first 15 EU members, for 2001-2004. The tables show information only for the countries that have significant share for Romania.
IMPORT ROMANIA – YARNS AND FABRICS 2001 – 2004 Quantity
Table 1 2001 2002 2003 2004 Country
thousands tons
% thousands tons
% thousands tons
% thousands tons
% 2004/ 2001
Czech Rep. 1,28 0,79 1,15 0,66 1,16 0,63 1,05 0,54 0,82 China 5,58 3,46 6,34 3,62 8,65 4,72 11,46 5,86 2,05 South Korea 3,02 1,87 3,54 2,02 2,40 1,31 1,68 0,86 0,56 Russia 0,90 0,56 0,76 0,43 1,59 0,87 2,15 1,10 2,39 India 0,68 0,42 1,14 0,65 1,43 0,78 1,62 0,83 2,38 Taiwan 1,75 1,09 2,18 1,24 1,76 0,96 1,48 0,75 0,84 Turkey 16,39 10,17 20,64 11,79 26,34 14,37 30,37 15,52 1,85 Hungary 2,68 1,66 1,05 0,60 1,24 0,68 1,56 0,80 0,58 UE (15) 119,95 74,41 128,30 73,27 130,30 71,10 135,00 69,00 1,13 Other 8,97 5,57 10,02 5,72 8,39 4,58 9,27 4,74 1,03 Total Import
161,20 100 175,12 100 183,26 100 195,64 100 1,21
IMPORT ROMANIA – YARNS AND FABRICS 2001 – 2004 Value
Table 2 2001 2002 2003 2004 Country
mill. USD % mill. USD % mill. USD % mill. USD % 2004/ 2001
Czech Rep. 12,4 0,77 12,1 0,67 15,4 0,72 14,0 0,57 1,13 China 14,1 0,88 22,1 1,22 34,0 1,59 51,1 2,09 3,62 South Korea 23,2 1,44 24,3 1,34 22,8 1,07 18,3 0,75 0,79 Russia 2,5 0,16 2,2 0,12 5,4 0,25 7,3 0,30 2,92 India 1,9 0,12 3,9 0,21 6,5 0,31 12,6 0,52 6,63 Taiwan 10,4 0,65 10,9 0,60 9,0 0,42 8,1 0,33 0,78 Turkey 92,0 5,73 136,9 7,53 194,6 9,11 245,7 10,07 2,67 Hungary 11,5 0,72 5,8 0,32 8,3 0,39 15,8 0,65 1,37 UE (15) 1371,7 85,46 1517,9 83,51 1764,8 82,65 1983,0 81,22 1,45 Other 65,4 4,07 81,5 4,48 74,5 3,49 85,5 3,50 1,31 Total Import
1605,1 100 1817,6 100 2135,3 100 2441,4 100 1,52
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Comments regarding the yarn and fabric import: The total import grew in 2004 as compared to 2001 (quantitatively – 1,21, in value – 1,52) The most important supplier was still EU 15 (with a quantitative share of 69% of the total yarn and fabric import in 2004, but it has dropped from 74.41% in 2001); in value the share is larger (81,22% in 2004), therefore the products are more expensive than those coming from other suppliers. Significant growth in 2004 as compared to 2001: The Russian Federation, India, Turkey.
IMPORT ROMANIA – GARMENTS 2001 – 2004 Quantity
Table 3 2001 2002 2003 2004 Country
thousands tons
% thousands tons
% thousands tons
% thousands tons
% 2004/ 2001
Bulgaria 0,23 1,21 0,84 3,29 0,43 1,55 0,16 0,52 0,70 China 5,45 28,69 10,02 39,30 10,89 39,26 13,21 42,90 2,42 Turkey 3,46 18,21 2,98 11,69 4,27 15,39 5,23 16,99 1,51 Hungary 0,76 4,00 0,48 1,88 0,30 1,08 0,31 1,01 0,41 UE (15) 7,50 39,47 8,94 35,06 9,51 34,28 9,09 29,52 1,21 Other 1,60 8,42 2,24 8,78 2,34 8,44 2,79 9,06 1,74 Total 19,00 100 25,50 100 27,74 100 30,79 100 1,62
IMPORT ROMANIA –GARMENTS
2001 – 2004 Value Table 4
2001 2002 2003 2004 Country mill. USD % mill. USD % mill. USD % mill. USD %
2004/ 2001
Bulgaria 0,1 0,06 0,5 0,27 1,3 0,55 2,8 1,03 28,00 China 5,1 3,17 7,5 4,04 10,1 4,26 15,7 5,79 3,08 Turkey 5,9 3,66 8,7 4,68 10,1 4,26 12,3 4,53 2,08 Hungary 9,9 6,15 6,4 3,45 5,1 2,15 8,0 2,95 0,81 UE (15) 131,3 81,50 151,1 81,37 196,0 82,59 200,6 73,94 1,53 Other 8,8 5,46 11,5 6,19 14,7 6,19 31,9 11,76 3,62 Total 161,1 100 185,7 100 237,3 100 271,3 100 1,68
Comments regarding the clothing import: The total import grew in 2004 as compared to 2001 (quantitatively – 1,62, in value – 1,68) The most important supplier in 2001 was EU 15 (with a quantitative share of the total clothing import of 39.47 and a value share of 81.50%).
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In 2004, quantitatively, on the first place came China, with a 42,90% of the total clothing import, as compared to EU 15 which owns 29,52; in value China’s share is only 5,79% as compared to 73,94% of the total clothing import. Significant growth in 2004 as compared to 2001: Turkey.
EXPORT ROMANIA – YARNS AND FABRICS / GARMENTS 2001 – 2004
Table 5 2001 2002 2003 2004 2004/2001 Total
export de:
thousands tons
Mill. USD
thousands tons
Mill. USD
thousands tons
Mill. USD
thousands tons
Mill. USD
thousands tons
Mill. USD
Yarn/
fabrics
36,8 131,5 42,0 158,9 47,3 232,4 51,1 272,1 1,39 2,07
Garments 54,7 828,1 59,4 966,4 58,4 1218,1 57,8 1386,3 1,06 1,67
The yarn, fabric and clothing export still grew in 2004 as compared to 2001.
DOMESTIC PRODUCTION ROMANIA –YARNS AND FABRICS/GARMENTS 2001 – 2004
Table 6
The quantity of yarn and fabric domestic production was in diminution in 2004 as compared to 2001.
1.2. LEATHER SECTOR Leather industry it’s one of tradition and very old known in Romania. As final product for
tanneries, the leather represents a “raw” material for other industries as: footwear (about 62%),
clothes (about 15%), leather goods (about 12%), upholstery and automotive leathers (about
11%). Leather processing is generating, in the same time, by-products applicable for other
fields of activity: protein sources for food, chemical or cosmetically purposes, medical
products, artificial leathers or soles etc.
The most intensive development has taken place in the period 1965 – 1980, for Romanian
leather sector. It had an important economical value in the areas of counties Timis, Sibiu, Cluj,
2001 2002 2003 2004 2004/2001 Domestic Production
of: thousands tons
Bill. ROL
thousands tons
Bill. ROL
thousands tons
Bill. ROL
thousands tons
Bill. ROL
thousands tons
Bill. ROL
Yarn/Fabrics 104,2 10490,3 103,4 12086,6 95,7 14320,9 95,8 16582,1 0,92 1,58
Garments - 54776,0 - 65281,0 - 65672,5 - 78376,0 - 1,43
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Bihor and in Bucharest. In that period, most of equipments, chemicals and technologies had to
be Romanian and production was directed for internal consumption and for export into the
socialist states.
After 1989, Romanian leather and shoe industry has to compete, in an open concurrential
market, with high performant industries/products all over the world. At the beginning of this
period, the differences between technical and technological level of our leather industry were
about 15 – 20 years, compared with those from developed countries.
In ’90s the internal demands for leather products has decreased continuously, socialist market
has disappeared and the quality and competitively of Romanian products were inferior.
Simultaneously exports and imports of raw and finished products have became free and the
prices of energy resources have raised drastically, producing a decapitalizing process, a lot of
viable companies being closed as the nonprofitables ones.
As a consequence of all internal and external factors, in leather and shoe sector has
developed an industrial restructuring process:
� Nonperforming techniques and equipments have been changed into new ones, modern
and more flexible, there where financial possibilities have existed;
� Reorganisation of technological flow charts and efficient management of working area;
� Modernisation of tanneries, especially in finishing sector;
� Significant changes in raw hides /skins processed by diminishing of internal resources
and raising imports of finished leathers for uppers and leather goods; after 1994, about
80% of shoe production is made in lohn system and the demands of domestic finished
leathers have drastically decreased.
Although, all problems and deficiencies the leather/shoe industry remains an important
industrial sector in Romania; a sector which try to increase its products competitiveness on
the single market. So, in 2004, leather/shoe industry has realised [1]:
- 0.9% from Romanian GDP;
- 5.2% personnel from industry is working in this field;
- 8.9% from Romanian exports;
- 4.5% from Romanian imports;
- 1.6% from Romanian industrial production;
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On international market Romanian leather/shoe industry has an important place, on EU, CSI,
CEFTA and USA markets. From CEECs, Romania is on 1st place regarding shoe exports
to EU market and on 9th place worldwide.
The internal situation of leather/shoe industry, nowadays, is synthetically presented in Table 7
and in Figure 5.
Table 7 Figure 5 Most important leather/shoe area Geographical distribution of tanneries/ shoe in Romania factories in Romania The companies’ structure in leather/shoes field is presented in table 8. From these companies
about 120 are reported as leather companies. This doesn’t means that there are 120 tanneries;
most of them have as activity object “leather processing” but they are processing hides in an
existing tannery [2].
Table 8 Leather/shoes companies’ structure Total light industry Leather/shoe industry TOTAL: 8942 1731 Large size 364 91 Medium size 1352 282 Small size 1897 419 Micro size 5329 939
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2. NATIONAL QUESTIONNAIRES SURVEY RESULTS 2. 1. TEXTILE SECTOR
Questionnaires were sent to 170 textile/clothing companies, answers were received only from 80 companies.
1. Company profile.
1.1 In which sector does your company operate? Number of
companies Mainly textile (spinning/weaving) 21 Mainly clothing (apparel) 59 Total companies 80
1.2 Products sold: Number
of companies
Mainly yarns, fabrics 18 Mainly men’s wear, women’s wear, baby/child wear, sportswear 53 Mainly technical items 5 Mainly knitwear (outwear and underwear) 2 Mainly home textiles, upholstery/curtains/carpets 2 Mainly others (specify) - Total companies 80 1.3 Origin of products sold: Number
of companies
Own Production 68 Traded product (outsourced/import) 12 Total companies 80 1.4 Size
Total companies
- turnover (M euro)
<5
5-20 20-50 >50
Number of companies 19 36 15 10 80 - n. employees
<10 10-50 50-250
>250
Number of companies 5 41 34 80 1.5 Sales (markets)
Number of companies
Mainly Domestic 19 Mainly EU 15 54 Mainly EU new accession countries 2 Mainly Rest of the world 2 Total companies 80
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2. General Awareness on Competitiveness (please tick your choice) 2.1 Your company’s sales are: In terms of
Quantity (number of companies)
In terms of Value
(number of companies)
- Increasing 27 27 - Decreasing 16 19 - Stable 37 35
2.2 Do you think that the current strengths of your company are sufficient to cope with competition or need change:
Number of companies
- No changes 18 - Minor changes 35 - Major changes 27
Total companies 80 2.3 In the next two years the competitive position of your company will be stronger, weaker or similar to present in your market?
Number of companies
- Stronger 34 - Weaker 14 - Similar 32
Total companies 80 2.4 Who are the most threatening competitors? Number
of companies
Domestic 28 European Union 10 (from newly accessed countries) 29 European Union 15 - South Mediterranean 2 Chinese 48 Other (specify) -
13
3. The Chinese issue In recent years Chinese manufacturers substantially increased their market share in European markets. This trend is expected to continue in the next years, facilitated by the complete elimination of the quota system 3.1 Did your company have DIRECT consequences of the recent increase in Chinese competition?
Number of companies
YES 51 NO 29 Total companies 80
3.2 Consequences were: Number
of companies
loss of clients 15 reduction of sales to one or more clients 25 decrease of own prices in order to maintain the same level of sales
26
reduction of quantities and decrease of price in own sales
20
Other (specify): -
3.3 The negative impact on your business was: Number
of companies
very remarkable 3 significant 32 minor 16 Other (specify): -
3.4 In which segment of your clients did your company suffer most the Chinese competition?
Number of companies
Domestic traders (retailers/wholesalers) 13 European (25) traders (importers/wholesaler/retailers) 42 Rest of the world traders 4 Domestic manufacturers (supply chain) 3 European 25 manufacturers (supply chain) 23 Rest of the world manufacturers -
3.5 Which of your products were hit the most by Chinese competition?
Number of companies
Upper range 17 Middle range 29 Lower range 22
14
3.6 What are the strongest competitive factors of the Chinese exporters?
Number of companies
Price 80 Price/quality ratio 11 Customization/Flexibility 4 Scope of product range 23 Other (specify): -
3.7 Do you think that the Chinese manufacturers adopt unfair competitive practices?
Number of companies
Only sometimes 22 Often 25 All Chinese sales are characterized, to some extent, by unfair practices
28
3.8 Do you have evidence of unfair practices? Number of
companies Yes, direct evidence 5 No direct evidence 12 Only Clues 35 Rumours of the market 54 3.9 In your opinion, which kind of unfair commercial practices are adopted by the Chinese?
Number of companies
False custom declarations 28 Unregistered imports/smuggling 23 Dumping 63 Counterfeited products 43 Other (specify) -
3.10 Who are the strongest allies of Chinese products?
Number of companies
Local consumers 35 Those local manufacturers who outsource production in China
21
International brands present in your country (e.g. Benetton, Hugo Boss)
13
Large retailers in your countries 31 Traders (importers/wholesalers) 54 Other (specify ) -
15
3.11 Do the Chinese manufacturers have weak points?
Number of companies
Quality 73 Delivery/service 32 Product design 15 Other (specify ) 3.12 Under the current general conditions, how large is the competitive advantage of Chinese producers in the following factors:
Number of companies
Large (number of companies)
Significant (number of companies
Minor (number of companies
no advantage (number of companies)
Price 74 1 1 Price/Quality ratio
17 33 16 4
Customization 5 13 32 19 Product Range 1 13 31 15 Other( specify ): -
4. The Future 4.1 In the next years the Chinese presence in European markets will:
Number of companies
Increase 56 Remain as today 15 Decrease 9 Total companies 80 4.2 What factor may be effective to counter Chinese competition under the current general trade condition
Number of companies
Productivity increase and costs reduction 57 Quality 44 Fashion/Design 21 Brand/Communication 18 Service/delivery 28 No factor is really effective 1 Other (specify ) -
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4.3 In your opinion what are the levers that should be supported to enhance the competitiveness of European manufacturers
Number of companies
Support innovation (technology, design, etc ) 42 Support the financial strengthening of companies, 43 Support human resource development (training, etc)
33
Lower taxes, lower social costs 66 Other (specify) -
4.4 Does your company have a strategy to deal with the new competition
Number of companies
Not yet 13 We have been thinking about but a new plan has not yet been outlined
54
Yes, we have developed a new competitive strategy 17 Other (specify ) -
4.5 If you have been thinking about a new competitive strategy what are the actions that you envisaged? (1=low importance, 5 = high importance)
1 (number of companies)
2 (number of companies
3 (number of companies
4 (number of companies
5 (number of companies
Price reduction through cost reduction and increased productivity
27 18 9 9 9
Price reduction through outsourcing of some production processes/products
17 9 17 6 2
Quality improvement (materials and manufacturing processes)
13 22 8 13 4
Improvements in design and fashion
9 5 16 8 7
Improvement of service component (delivery, etc )
4 15 15 11 8
Improvement of customer satisfaction through customization
5 5 4 9 11
Investments in image, brand and communication
4 4 6 4 14
Other (specify ) -
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2.2. LEATHER SECTOR Regarding competitiveness of Romanian leather industry, during November 2004 – January
2005 have been made a study on basis of a Competitiveness Questionnaire elaborated by
CAST, Italy. In Romanian leather field have been sent to over 50 companies but only 17 have
sent completed forms. The general situation resulted from these is the following:
Company profile: - 94,11% are tanneries;
- 5,89% leather goods producers;
- 76,47% are selling leather products (included shoes);
- 17,47% are leather sellers;
- 5,88% are selling clothes and other leather goods (other than shoes);
- 70,59% own production sold;
- 29,41% lohn production sold;
- 64,70% are large companies;
- 17,64% are medium size;
- 17,64% are small size;
Markets: - 82,35% mainly EU 15;
- 17,64% mainly Domestic.
General Awareness on Competitiveness
Company’s sales are: In terms of Quantity In terms of Value Increasing: 47,06% 35,30%
Decreasing: 35,30% 35,30%
Stable: 17,64% 29,40%
Regarding current strengths of company over 50% consider that need minor changes to
cope with competition and the same figure consider that in the next two years the competitive
position of their company will be similar to present on the market.
18
The most threatening competitors are:
� 41,18% Chinese;
� 17,64% EU 15;
� 11,76% EU 10;
� 11,76% Domestic;
� 11,76% South Mediterranean;
� 5,90% Others like: India, Indonesia and Vietnam.
The Chinese issue
DIRECT consequences of the recent increase in Chinese competition: 76,47% YES
11,76% NO
11,77% Not affected
Consequences were quite equally distributed between reduction of quantities and decrease of price in own sales, decrease of own prices in order to maintain the same level of sales and reduction of quantities and decrease of price in own sales. The negative impact on their business was: 64,28% significant 28,57% very remarkable 7,15% minor The segment of company clients which suffer most from the Chinese competition is
European (25) traders (importers/wholesaler/retailers) (about 44%) and products the most
affected are the middle range ones (about 70,59%).
Romanian leather companies consider that the strongest competitive factor of the Chinese
exporters is the price (about 70,83%).
About 41,67% from Romanian leather companies think that all the Chinese manufacturers
adopt unfair competitive practices and 33,33% consider that this is often happened, but
they don’t have direct evidence.
Examples of most frequent unfair commercial practices adopted by the Chinese are:
� Counterfeited products (29,41%)
� Dumping (29,41%)
� Unregistered imports/smuggling (20,58%)
19
� False custom declarations (17,65%)
The strongest allies of Chinese products are traders (importers/wholesalers) (32,41%) and
local consumers (25%). Regarding the last ones, these, due the low incomes prefer to buy
poor quality products at low prices.
The weak points of Chinese manufacturers are:
• 57,90% Quality;
• 21,05% Product design;
• 21,05% Delivery/service.
Under the current general conditions, the competitive advantage of Chinese producers is
in the following factors:
• 38,24% Price;
• 26,47% Price/Quality ratio;
• 20,59% Product Range;
• 14,70% Customization.
Regarding The Future, Romanian leather companies consider that the Chinese presence in
European markets will: - increase (88,23%);
- remain as today (11,77%).
In Romanian leather companies’ view, the most important factors which may be effective to
counter Chinese competition under the current general trade condition are:
� Productivity increase and costs reduction;
� Quality; and
� Fashion/Design.
The levers that should be supported to enhance the competitiveness of European
manufacturers are:
� Lower taxes, lower social costs (35,89%);
� Support the financial strengthening of companies (30,77%);
� Support innovation (technology, design, etc) (20,52%);
20
� Support human resource development (training, etc) (12,82%).
Romanian leather companies recognize that they need a strategy to deal with the new
competition but for the moment it isn’t very well defined.
� Quality improvement (materials and manufacturing processes),
� Price reduction through cost reduction and increased productivity,
� Improvements in design and fashion,
� Innovation,
� Investments in image, brand and communication
are few actions that they have envisaged for a new competitive strategy.
3. SWOT ANALYSIS OF ROMANIAN LIGHT INDUSTRY
Till now, Romanian light industry (Textile/Clothing and Leather/Shoe) had the advantage
of low labour costs and intensive work.
Like in many other CEECs countries, Romanian industry has suffered competitiveness loose
in the last 10 years. Some of the factors (with positive or negative effect) which are important
in competitiveness of Romanian light industry are following presented.
3.1. STRONG POINTS:
� Light industry is a viable sector with long tradition in Romania;
� There are viable industries, their products have assured markets, being destined to
vital and fashion needs of people;
� Its products are competitive for domestic and export markets;
� Has a stable and well qualified personnel;
� Raw materials are high valorised;
� Large flexibility and adaptability to changes;
� Final sectors have the capacity to sustain the imports, in the same time creating a
currency surplus due the exports;
� Comparatively with other industrial sectors, the modernisation or the establishment of
new company’s costs are not very high.
21
3.2. WEAK POINTS:
� Lack of domestic raw materials as quality and quantity;
� Still a large amount of low-performance machines and technologies in the primary
sectors (textile and tanneries);
� High processing costs in primary sectors, mainly due to:
o large unstructured units, with low flexibility and adaptability to the demands of
the markets,
o use of units below profitableness level,
o over dimensioned personnel,
o low productivity,
o high material and energetic consumption as compared to those on worldwide
level,
o lack of investment funds and work capital;
� Lohn system limits the possibilities of capital rising from company own sources and
reduce the relations between domestic primary and final companies;
� Lack of their own delivery/sales systems on the external market;
� Communication and information problems;
� Difficulties in accessing the financing sources;
� Delay orientation to more complex and upper range products;
� Absence of a general and adequate frame to stimulate and improve entrepreneurial
skills in marketing, management and controlling.
3.3. OPORTUNITIES
� Pan –Euro –Mediterranean free trade area, where Romania and Bulgaria will be
included too, as the other 12 members;
� The existence of three new potential markets: enlarged EU, USA, CSI countries,
� Favourable environment for the creation of SMEs with low investment expenses;
� The existence of an important fixed means fund consisting of buildings;
� Direct investments growth, both from internal or external sources;
� Companies’ competences growth in quality management, R&D, design, branding,
marketing;
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� Investments in personnel knowledge/skills development using the existing and well
organized educational&training system;
� R&D involvement in innovation and creation of high added value products;
� Important investment projects dedicated to: infrastructure, environmental protection
zones development etc.;
� Consultancy regarding EU accession, exports development, competitiveness on free
market training etc.;
� Romanian economy connected to the European and international ones.
3.4. THREATS
There are different threats which are influencing competitiveness of Romanian light industry.
The most important are:
o Institutional threats (administrative-bureaucratic barriers; sectoral association are not
functional; fiscal instability; etc);
o Financial threats (lack of support the financial strengthening of companies; difficulties
in obtaining and repayment bank finance for SMEs; low level of investments; due to
the low incomes Romanian consumers prefer to buy poor quality products at low
prices);
o Maintaining the „expensive credits” for environmental protection, modernizing and
updating technology;
o Enhanced competition from European and Asian products;
o Legacy threats (internal legacy and bureaucracy which act as a brake in transportation,
commerce and export of products; legacy procedures which are not harmonized with
the EU ones, high export costs);
o Dependence of the raw materials and accessories which are not produced in the
country in the desired amount and quality;
o Producer threats ( lohn system has reduced innovation, development of new and
original products/brands; quality standards );
o Market threats (reduced internal market; high demand for cheap products due to low
buying power of Romanians; lack of educational programmes for consumers;
Asian issue and especially China; lack of information for importers/wholesalers)
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4. COMPARISON WITH OTHER COUNTRIES SURVEYED
On the basis of Summary of Questionnaire on Competitiveness from each sector (Textile /
Clothes and Leather / Shoes), CAST has made a General Survey on Competitiveness in the
10 participating countries:
� Bulgaria
� Czech Republic
� Estonia
� Hungary
� Latvia
� Lithuania
� Poland
� Romania
� Slovakia
� Slovenia
Followings are the comparative conclusions for Romanian companies on the main four points
of questionnaire, as they have been presented by CAST specialists during the PERFECTLINK
WORKSHOP held in Bucharest, on 18th of May 2005.
1. Company profile
The Romanian sample of companies presents some specific characteristics that make it
different from other samples:
� a high proportion of large companies (both in terms of employees and turnover)
� a higher than average presence of technical textiles producers.
� a large share of medium size “employers”
� a large share of sales to European Union 15 countries.
2. General Awareness on Competitiveness
Romanian companies are among the most optimistic samples interviewed.
Most of them are confident to be able to grow and prosper.
They are aware that Chinese competition is strong but they know that also local producers can
be very competitive.
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3. The Chinese issue
Romanian companies had to face decrease of sales and reduction of prices due to Chinese
competition also in upper-range products.
The general picture outlines an unbeatable position for the price factor and the price/quality
ratio of Chinese products.
Prices of Chinese products are so low that Romanian companies suspect them to be the result
of dumping practices.
4. The Future - Shaping new T/C and L sectoral strategies
Therefore the strategy that is emerging is based on one hand on a cost reduction and increased
productivity in the company themselves together with a general upgrading of the
product/service range. On the other hand lower taxes and lower social costs are considered
vital.
The emerging strategy aims at ensuring that the competitiveness of Romanian textile/clothing
and leather companies remains high and capable to deal with the new competitors.
5. THE EUROPEAN FRAMEWORK: THE EUROPEAN COMMISSION
SUPPORT POLICY AND PROGRAMMES
In his presentation at the PERFECTLINK WORKSHOP held in Bucharest, on 18th of May
2005, Mr. Francesco Marchi - TTrraaddee && IInndduussttrryy DDiirreeccttoorr iinn EEUURRAATTEEXX –– ssaaiidd tthhaatt tthheerree aarree
aabboouutt 34 actions for five pillars at EU level.
At the end of 2004, Commission and Member States endorsed the Recommendations worked
out by the High level Group. Those recommendations list the actions to be carried-out by:
� The Commission
� The member States
� The Stakeholders: Industry, Regions, Traders…
The 34 Actions at EU level will be:
21: carried-out or in the process of completion with Euratex involvement;
5: Euratex could take some future initiatives;
8: Euratex cannot act as those depend on Commission; Member States or Regions.
Actions will be concentrated in five areas:
� Environment
� Intellectual Property Rights
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� Education & Training
� Innovation and R&D
� Trade
as following:
Environment: Impact assessment study on the New Chemical policy - REACH
Intellectual Property Rights:
� User friendly multi-lingual web-site on Intellectual Property Rights;
� Vade-Mecum on IPR
� Information & awareness seminars at National level
Education & Training:
� Establishment of EU/National Observatoires
� Common structure of courses - Network of training
� Commons Qualification standards
� Implementing reconversion & re-classification units
� Sectoral Dialogue
Innovation and R&D:
� Technology Platform to identify long term industry vision for Research
&Development & Innovation
� Technical textiles
� Clothing Technology Breakthrough
� Integration of SMEs in R&D programs
� Non-technological innovation
Have been presented some European projects coordinated by EURATEX in R&D, innovation,
education and IPR.
Trade:
� Market Access Task Force
� Guidelines textile specific safeguard-China
� International actions
� Monitoring of trade
� Euromed common origin rules for easier, faster trading relationship
� Concentrate General System of Preferences (GSP) to smaller & Less Developed
Countries (LDC) + adaptation rules of origin
As conclusions at regional level must be elaborated more flexible procedures to facilitate
SMEs greater access to structural funds. Also, companies together with R&D institutes and
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universities have to propose projects within the technological platform, which results must
solve sectoral problems.
Competitors are not only China and Turkey but the other industrial sectors and to win means
to have a simple and well fundamented strategy.
In the same manner was the intervention of Mr. Gustavo Gonzalez-Quijano COTANCE –
Secretary General, who has presented some “Possible Measures at European Level”.
COTANCE The Confederation of National Associations of Tanners and Dressers of the
European Community is the representative body of the European Leather Industry.
It is a non-profit organization established in order to promote the interests of the European
tanning industry at international level.
The main objectives of COTANCE are EU Lisbon Strategy Objectives: to become by the
year 2010 the most competitive and dynamic knowledge-based economy in the world
capable of sustainable economic growth with more and better jobs and greater social
cohesion.
As principal actions of COTANCE have been presented:
� We have successfully managed the regulatory development in the area of environment
and health & safety
� We have eliminated most existing illegal trade barriers and have managed that the EU
integrates our concerns in its trade priorities
� We have built up strategic relations & networks with allied sectors
� We have opened up EU funding and dynamised sectoral R&D & Education
� We have a result-oriented Social Dialogue
COTANCE involvement in the area of:
Environment (one of the most problematic area of tanning industry)
� Water legislation
� VOC
� IPPC – Bref for Tanneries (Revision)
� EWC/HWL
� EPER
� PCP, Azo-Dyes
� REACH
� Balai Directive
� ABP Regulation 1774/2002
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� Food Safety Regulation
� Reform of the CAP
Trade
� 15 years ago: Europe’s claims were not listened to and not respected by the
International Community
� In the 90’s Europe starts challenging unfair trade patterns, its claims are heard and
acknowledged
� Today: Europe’s claims are followed up in a regular dialogue with EC Directorate
General Trade and well positioned within the WTO Round
Chemicals
� 15 years ago: COTANCE went to meet major chemicals companies
� Just before the White Paper: COTANCE tries to broker a deal on chemicals use with
TEGEWA
� Now: Chemicals companies come to meet COTANCE (Elementis, BASF, Buckman
Laboratories, etc.)
Social Dialogue
� Support for Image – CSR: Code of Conduct
� Support for Training – Projects
� Support for Trade – Joint Declarations
� Support for « Made in… » - idem
� Support for Funding – Cooperation
R&D and Education
� Some 15 Million �/year in EU projects
� SPRINT
� TANNET
� RESTORM
� SILIC-SALT
� DERMAGENESIS
� Leonardo + Craft-type Projects
Future commitments of COTANCE are:
� Anchoring COTANCE interests in the 7th EU Framework Programme for Research &
Development (EARTO, …)
� Influencing the networks embodying industrial value chains (Chemi, …)
� Organising the supply chain (EU Contract, traceability, …)
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� Surfing the wave of public opinion (Eco-label, CSR, …)
� Developing the image of European leather in the internal market & opening export
markets (« Made in », Dialogue DG Trade, WTO, …)
� Cooperation with EURATEX in order to offer a better visibility and support for
European textile & leather industry.
6. GOVERNMENT PLANS FOR SUPPORTING LIGHT INDUSTRY
Romanian government by the Ministry of Economy and Commerce have in view to sustain
and support light industry in its aim of competitiveness growth. For this have been taken the
following measures:
� Quality, environment, social, safety & health standards implementation and
ecolabeling of products implementation by governmental financial support (50% for
SMEs and 65% for large size companies) in the framework of the “Programme for
competitiveness improvement” coordinated by Ministry of Economy and Commerce.
� Development and improvement of the instruments for companies support by
increasing of budgetary funds and by extension with new actions as:
• development of design centres for clothes and shoe;
• support in realizing and promoting of companies own collections and
lohn reducing;
• brand, models and industrial drawings protection;
• training and skilling of personnel from the sector;
• support in subcontracting projects between large and small companies,
having in view the increase of added value of products and integral
export.
For light industry development and market strengthening have been launched the following
specific objectives:
� Increase of production with 3,4% per year in 2005 / 2007 period, by modernisation of
viable companies and by new company’s development, especially in primary sectors (e.g.
tanneries etc.)
� Competitiveness growth of sector products, on domestic and external markets;
� Direct export increasing with a rate of 5,9% per year in the period 2005 – 2007;
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� Industrial development in correlation with environmental factors and EU directives, these
representing an essential component of the industrial competitiveness;
� Promoting of R&D project for sectoral problems solving in a large partnership between
companies, R&D institutes and universities.
7. CONCLUSIONS
The information has been collected at the end of 2004 and do not reflect the real
situation at this moment in the light industry in Romania.
Now, challenges for the light industry in Romania have come in the way:
- the drop in the interest in the processing activity as a consequence of the rise in
the minimum salary in economy;
- the rise in the utilities price, with consequences in the lohn-type activity;
- appreciation of national currency in comparison with the main international
currency with direct effects for the competitiveness of products to export ;
- uncertain perspectives with respect to developing the raw materials basis in
agriculture;
- the need for urgent implementation by the economic agents of European
standards on quality, environment, social, occupational safety and decent work
in order to keep selling products on EU, US markets etc.
The proposal for a national strategy for light industry is in government plans.
For Romanian light industry there are some problems which must be solved:
� the first and most important is a better sectoral organization recognized at EU
level;
� a better information of SMEs on access possibilities to structural funds;
� information of SMEs on EU actions and problems (environment, trade, REACH,
social dialogue, R&D and education etc.);
� training and skilling of personnel from the sector;
� large dissemination of EU regulations regarding future EU accession.
This paper have been written by the representatives of ATEROM and ICPI - ROMANIA
BUCHAREST, June 2005
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References:
1. *** Development Strategy for Leather and Shoe Industry, on Medium and Long Term, 2003 2. Mirciu V., MEC - Romanian Light Industry (Textile, Clothes and Leather – Shoes Industry) – Present and Perspectives; paper presented in PERFECTLINK Romanian Workshop, May, 2005 3. Deleanu T., G. Anghelescu, ATEROM - National Statistics in Romanian Textile Industry; paper presented in PERFECTLINK Romanian Workshop, May, 2005 4. L.Albu, ICPI – National Statistics and General Result on Competitiveness Questionnaires for Romanian Leather Industry; paper presented in PERFECTLINK Romanian Workshop, May, 2005 5. Oriana Mazzali, CAST - Results of Company Questionnaires in the 10 Participating Countries; paper presented in PERFECTLINK Romanian Workshop, May, 2005 6. Francesco Pellizzari, CAST - Import and Export in the 10 Participating Countries; paper presented in PERFECTLINK Romanian Workshop, May, 2005 7. Francesco Marchi, EURATEX - Political implications & possible measures at EU level; paper presented in PERFECTLINK Romanian Workshop, May, 2005 8. Gustavo Gonzalez-Quijano - Survey on Competitiveness - Possible Measures at European Level; paper presented in PERFECTLINK Romanian Workshop, May, 2005