September 2007

Turkey and World Merchandise Trade

In year 2005 ;

Top 3 countries with the largest export size, Germany, USA, China

Turkey; with 73,4 billion USD acquires %0,7 of world-wide export

Turkey’s rank in world-wide export is 34

Source: WTO REPORT 2006

Turkey and World Merchandise Trade

In year 2005;

Top 3 countries with the largest import size; USA, Germany, China

Türkiye with 116,6 billion USD acquires %1,1 of world-wide import

Turkey’s rank in world-wide import is 23

Source: WTO REPORT 2006

World-Wide Merchandise Trade

Textile + Clothing

2004 : %5

2005: %4,7

Source : DTM (2005)

  2004 2005 Change2005 Rate

Agricultural Products 788,10 851,90 8% 8%

Fuel and Mining Products 1.284,10 1.748,50 36% 17%

Iron & Steel 270,70 318,20 18% 3%

Chemicals 983,10 1.104,10 12% 11%

Other Semi-Production Industry 643,60 710,80 10% 7%

Machinery and Vehicles 3.530,30 3.851,40 9% 38%

Textile 195,40 203,00 4% 2%

Clothing 259,20 275,60 6% 3%

Other Productin Industry 1.003,50 1.095,50 9% 11%

Grand Total 8.958,00 10.159,00 13% 100%

Turkish Textile and Clothing Sector

Textile Large/ Medium Size

Companies Capital Intense Approx. 2000 companies Info/Infrastructure Highly

Equipped Institutionalized 500.000 Employee

Business Size and Export Performance

Clothing Small/ Medium Size Companies Labour Intense 30000 big-little companies Less Equipped Flexible, Fast Decisions 2,5 million Employee

Textile’s Importance in Turkish Economy

Share in GNP % 7,8

Share in Industry % 19,9

Share in Production % 18,4

Share in Total Employment % 13,6

Share in Industry Employment % 23,9

Source: calculated by DPT, DIE ve SSK data

Textile and Clothing’s Contribution to GNP from the Foreign Trade Perspective

3,2 4,35,6 6,6

5,66,8 6,4

7,79,8

0

5

10

Milyar USD

1996 1997 1998 1999 2000 2001 2002 2003 2004

Yıl

Source: Calculated by DTM Data

Billion USD

Turkey’s Textile + Clothing Export

TOTAL EXPORT TEXT + CLOTH. EXP T+C

YEAR (billion $) (billion$) Share %

2000 27,8 10,0 36,1

2001 31,3 10,4 33,2

2002 36,1 12,2 33,7

2003 47,3 15,1 32,0

2004 63,2 17,6 27,9

2005 73,1 18,9 25,8

2006 85,8 19,6 22,8

2007-08 66,8 14,7 22,1

Source: DTM, İTKİB

Turkey’s Textile + Clothing Export

0

5

10

15

20

25

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Bil

lio

n U

SD

Turkey’s Textile and Clothing Export’s Proportion to Total Export

20%

22%24%

26%28%

30%

32%34%

36%38%

40%

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

EU25,USA vs. Turkey,China

EU25 Textile Import 20.972 million USDChina ; 3.921 million USD; %18,7 , 1. rankTurkey;3.395 million USD; %16,2 , 2. rank

EU25 Clothing Import 65.863 million USDChina; 16.052 million USD ; %24,4, 1. rankTurkey; 9.792 million USD; %14,9, 2. rank

USA Textile Import 20.662 million USDChina; 4.601 million USD, %22,3, 1. rank

Turkey; 655 million USD,%3,2, 9. rankKaynak : DPT Ongut Report 2005 Data

Turkey Export Clothing Mostly to :

1. Germany 3.459 million USD

2. UK 2.336 million USD

3. USA 1.020 million USD

4. France 969 million USD

5. Holland 887 million USD

6. Spain 751 million USD

7. Italy 658 million USD

First 7 Total : 10.080 million USD (% 72)

Total Export : 13.987 million USDKaynak : İTKİB 2006 Evaluation

Report

Turkey Export Textile Mostly to :

1. Italy 588 million USD

2. Russia 485 million USD

3. Germany 356 million USD

4. Romania 324 million USD

5. Bulgaria 247 million USD

6. Poland 231 million USD

7. England 230 million USD

First 7 Total : 2.461 million USD ( %44)

Total Export : 5.576 million USDKaynak : İTKİB 2006 Evaluation

Report

12%

9%

8%

6%7%

58%

Raw Material

Human Resources

Energy and Water Costs

Financial Expenses and Depreciation

Chemicals

Others

Cost Composition in Textile Products

Source ITKIB Sector Research

47%

26%

7%

10%10%

Raw Material

Human Resources

Financial Expenses and Depreciation

Excipient , Accessory

Others

Cost Composition in Clothing Products

Source ITKIB Sector Research

Input Price Index

YILCotton

Yarn IndexSynthetic

Yarn Index USD Index Euro Index

Minimum Wage Index

2002 100 100 100 100 100

2003 119,2 114,6 87,3 96,9 114,9

2004 122,4 122,4 87,4 105,5 145,1

2005 117,3 133,8 82 90,9 159,7

2006 134,6 165,2 88,4 106 173,5

Source: TGSD Pres./Ahmet Nakkaş

World Short- Staple Spindle Capacity

1990 1995 1998 2000 2005

(.000) % (.000) % (.000) % (.000) % (.000) %

India 26.549 16% 29.390 17% 34.874 21% 36.910 24% 34.140 18%

China 35.650 22% 41.585 25% 42.456 25% 33.826 22% 75.000 40%

Pakistan 5.098 3% 8.281 5% 8.333 5% 8.438 5% 10.278 5%

Indonesia 4.200 3% 6.500 4% 7.050 4% 7.078 5% 8.000 4%

Thailand 2.800 2% 4.000 2% 4.095 2% 3.719 2% 3.813 2%

Other Asia 23.135 14% 20.296 12% 17.806 11% 16.745 11% 18.631 10%

Total Asia 97.432 59% 110.052 65% 114.614 69% 106.716 69% 149.862 80%

Africa 7.627 5% 8.058 5% 7.765 5% 7.134 5% 6.228 3%

East Europe 8.456 5% 6.710 4% 5.681 3% 5.031 3% 4.940 3%

West Europe 11.627 7% 7.265 4% 6.256 4% 5.788 4% 3.784 2%

Turkey 3.900 2% 4.219 3% 5.382 3% 5.465 4% 6.418 3%

Russia 10.000 6% 4.306 3% 3.553 2% 3.390 2% 1.704 1%

Brazil 5.750 3% 9.000 5% 6.500 4% 5.523 4% 4.498 2%

USA 11.550 7% 6.261 4% 4.527 3% 3.706 2% 1.430 1%

Other 8.906 5% 12.413 7% 12.605 8% 12.928 8% 9.474 5%

Total 165.248 100% 168.284 100% 166.883 100% 155.681 100% 188.338 100%

Source: ITMA 2006 Report

East Europe Short-Staple Spindle Capacity

1990 1995 1998 2000 2005

(.000) % (.000) % (.000) % (.000) % (.000) %

Italy 1.925 17% 1.803 25% 1.667 27% 1.507 26% 1.205 32%

Spain 1.907 16% 1.159 16% 1.075 18% 1.019 18% 223 6%

Portugal 2.007 17% 1.200 17% 1.100 18% 1.010 17% 860 23%

Greece 1.468 13% 800 11% 877 14% 877 15% 682 18%

Germany 1.576 14% 679 9% 487 8% 487 8% 266 7%

France 766 7% 409 6% 277 5% 277 5% 72 2%

UK 661 6% 277 4% 131 2% 131 2% 130 3%

Other 1.317 11% 938 13% 481 8% 481 8% 346 9%

Total 11.627 100% 7.265 100% 6.095 100% 5.789 100% 3.784 100%

Source ITMA 2006 Report

Sectoral Strategies : Parameters of Competition In Production

Countries Corporate Tax Rate

Governmental Employment

Burdens over Base Pay

Average Labour Cost Base Pay USD /

HourEnergy Prices

Industry KWH/USD

Romania 16 21,0 1,60 0,96

Albania 23 30,7 1,10 0,65

Egypt 20 25,0 0,85 0,21

Uzbekistan 15 + 8 31,0 0,60 0,25

Poland 19 41,9 3,80 0,7

China 33 35,0 0,60 0,55

India 33,7 16,8 0,67 0,8

Bangladesh 37,5 0,0 0,28 0,4

Tunisia 35 21,8 2,05 0,45

Vietnam 28 17,0 0,28 0,35

TURKEY 30 42,8 2,88 1,07

Source Ufuk 2015 Pres./Dr. Can Fuat Gürlesel

Turkish Textile’s Strenghts

1. High Capital Investment

2. Fast Delivery

3. Proximity to EU Market

4. Product Variety

5. Well-Educated, Entrepreneur Executives

6. Infrastructure of Transportation

Turkish Textiles’ Weaknesses

1. High Bank Loan Rates

2. High Labour Cost

3. High Public Burden

4. Expensive, energy, communication, transportation

5. Not Having Brands

Weaving- Clothing35%

Other Production32%

Mining1%

Agriculture1%Energy

6%

Services25%

Investment Incentives (1995-2005)

Source :HM

Investment Incentives (1995-2005)

Total : 173.222 Billion USD

Source : HM

Weaving- Clothing; 59.951

Other Production; 54.707

AgricultureMining

Energy; 10.767

Services; 43.461

Turkey 2005 Spindle Capacity

2005 Ring Capacity ;

Short Staple 6.418.744

Long Staple 743.000

Total Ring Capacity 7.161.744

2005 OE Rotor Capacity ; 552.634

Source ITMA 2006 Report

Turkey 2005 Weaving Capacity

2005 Weaving Capacity

Shuttle - Less ; 25.000

Shuttle ; 30.000

Total Cotton-Yarn Weaving 55.000

Filament Weaving 3.000

Wool Weaving 6.250 Source ITMA 2006 Report

Business Strategies : There will be 3 types of business in the sector

Business Type Connection Competition Elements

Business having brands in both domestic and international

market

Direct contact with domestic and

international customers/consu

mers

“ GLOCAL “ Brands OwnerDirect Sales via shops in homeland , abroadDesign Collection Fashion BrandGoods produced by contract manufacturers Quality- Price CompetitionMedium- Large Scale

Supplies producing to

global brands and buyers

Direct contact with Foreign wholesaler /

Retailer / Buyer

Design Collection CapacityFlexible small parties, Fast Production AbilityBoth produce and use contract manufacturersCost/Price – Quality CompetitionSmall – Medium Scale

Domestic Contract

Manufacturers

Direct contact with domestic

suppliers

Effective, Efficient, Quality ProductionFlexible, Small Party, Fast ProductionSmall – Medium ScaleCost/Price Competition

Kaynak Ufuk 2015 Pres./Dr. Can Fuat Gürlesel

Business Strategies; There will be 4 ways of transformation

TRANSFORMATIONS OLD WAY NEW WAY

PRODUCTION HIGH CAPACITY MASS PRODUCTION

FLEXIBLE, SMALL PARTY PRODUCTION

DESIGN SUPPLIER AND CONTRACT

MANUFACTURER PRODUCTS

VALUE ADDED , BRANDY PRODUCTS

MARKETTING PASSIVE MARKETTING ACTIVE MARKETTING

BRAND SUPPLIER AND CONTRACT

MANUFACTURER PRODUCTS

BRAND OWNED PRODUCTS

Source Ufuk 2015 Pres./Dr. Can Fuat Gürlesel