Bringing in more than 40% of Tunisia’s export earnings and providing employment to well over 200,000 people, the textile and clothing sector in Tunisia is a key driving force of the country’s economy. The sector has also attracted a major part of the foreign direct investment (FDI) that has gravitated to Tunisia in the past decade, with leading international brand names such as Benetton, GAP, Levi Strauss and Playtex all establishing production facilities in the country.
Of the approximately 2,100 firms active in the clothing and textile industries, more than 75% produce exclusively for the export trade, with total overseas earnings of some $4 billion in 2006.
However, the sector is coming under some pressure despite Tunisia’s favorable trade agreements with the EU, by far its biggest market. China’s growing dominance in the international clothing trade since the lifting of quotas and barriers in 2005, especially those of the now defunct Multi-Fibre Agreement, has put the squeeze on traditional Mediterranean manufacturers such as Tunisia and Turkey. So too has the accession of a number of Eastern European countries to the EU, with FDI being drawn to them, attracted by low wages, existing plants and good transport links.
Textile industry focuses on Italy
While other export-oriented industries had a strong year in 2006, with Tunisia’s mechanical and electrical industries posting an increase of 25% in overseas sales, the textile and clothing sector flat-lined, failing to match the overall GDP growth of 5.4% last year.
Though there has been an early surge in exports in the first five months of 2007, with overseas sales up 19% over the same period last year, this has to be balanced by the 4.2% drop in exports recorded for the first half of 2006.
During the textiles and clothing industries showcase annual event, TEXMED, held this year in Tunis in June, sector leaders were told they should step up their efforts to penetrate the lucrative Italian and Spanish markets.
Jean-François Limantour, chairman of the European-Mediterranean textile-clothing managers’ guild, told a seminar on the sidelines of TEXMED that more needed to be done by Tunisian producers to raise their profile in the Italian market. “In particular, there should be greater contacts with organizers of Italian trade shows to increase Tunisia’s profile as a clothing and textiles source,” he said.
However, he offered some solace, saying that Romania’s clothing industry, Tunisia’s main rival in the Italian market, could suffer from an exodus of skilled workers following its accession to the EU at the beginning of 2007.
Limantour also warned that Turkey could pose a challenge to the Tunisian industry, given its potential for expansion.
According to Youssef Neji, chairman and managing director of Tunisia’s Export Promotion Centre (CEPEX), the textiles and apparel sector has to strengthen itself ahead of the end of the quota system for Chinese textile exports in 2008.
Under World Trade Organisation rules, the US and the EU can restrict Chinese exports under two separate types of safeguard mechanisms that can be used until 2008 and 2013 respectively.
“The sector has to meet the objectives of a strategy laid out three years ago to move from being a subcontractor to focusing on partnerships and finished products,” he said.
Finding a niche
Jorge Rodriguez Taboadela, Spanish market advisor for CEPEX, said a sales and promotion approach targeting individual markets was the best course for the Tunisian textiles and clothing sector to adopt.
“In particular, clothing exporters should look to develop specific collections for a target area or country, taking into account culture, tastes and current trends,” he said. “Competition in this market is played on the level of innovation and difference and not on the quality and price levels.” Current developments in the sector show that despite investments in textile and clothing sector have eased off in the past two years, there is still room for development. At the end of 2006, Benetton announced it was to develop a 14,000 square meter finishing facility in the Monastir region at a cost of $29 million, as part of the company’s projected $332 million investment plans. While this represents a vote of confidence in the future of Tunisia’s textile sector, vigilance will be needed to keep this significant employment provider
