The Turkish apparel industry experienced a 9 percent decline in 2023 in parallel with the global apparel exports and decreased by 6.9 percent in 2024, despite the 2 percent contraction in global apparel exports. Stating that 29 percent of the loss of 1.3 billion dollars in 2024 was caused by the global recession, 46 percent by the contraction in the Russian, Ukrainian and Israeli markets, and 25 percent by the loss of competitiveness due to high inflation, high interest rates and suppressed exchange rates, TGSD President Toygar Narbay said: ‘There are important opportunities in front of the Turkish apparel industry, such as Trump’s measures against China, the increasing importance of close supply due to the EU Green Deal, and the possibility of an end to the wars in the region. However, in order to take advantage of these opportunities, it is essential to support our companies that want to protect their markets and production forces by selling unprofitable or even at a loss.’
Stating that the costs in the Turkish apparel industry are 61 percent more expensive than Asia and 46 percent more expensive than North Africa, he emphasised that if exchange rate and interest rate support is provided, the recovery in the sector will not be limited to exports, employment will increase again and imports will decrease.
“Our production loss in 2 years is 4.6 billion dollars”
Toygar Narbay noted that the contraction in 2024 corresponded to 1.3 billion dollars and stated: “According to our analysis, 29 percent of the loss was caused by the global recession, 46 percent by the loss in the Russian, Ukrainian and Israeli markets, namely in the war zones, and 25 percent by the loss of our competitiveness. In addition to the contraction in exports, apparel imports, which were 2.7 billion dollars in 2022, increased to 4 billion dollars at the end of 2024. This situation clearly shows that the policies implemented reduce export competitiveness while increasing imports.”
He stated that a total loss of 3.3 billion dollars was experienced in apparel exports between 2022-2024, and in addition to these losses, the total loss in apparel production reached 4.6 billion dollars with the increase in apparel imports by 1.3 billion dollars. In addition to these, he pointed out that there was a decrease of 146 thousand people in registered employment, ‘When we evaluate this production loss together with the textile industry, there has been a total employment loss of 290 thousand people in the textile and apparel industries in the last two years,’ Narbay said.
“We must protect our production power in order to seize opportunities”
Drawing attention to the important opportunities in front of the apparel industry, Narbay said: “Trump’s policies against China will increase geopolitical risks on the Asia-Pacific line, causing European and US buyers to review their supply security policies and turn to safer production centres. This will have a positive impact on Türkiye, which has the largest vertical integration after China. It is also an advantage for us that the supply chains of Bangladesh and Vietnam, the largest exporters after China, are largely dependent on China.”
He relayed that the second opportunity is that the Carbon Border Adjustment Mechanism will cover apparel and textiles in a few years: “Preparing for this regulation and the accompanying regulations will increase our preferability in the market. On the other hand, these regulations will force European buyers to comply with a series of regulations such as responsible sourcing, inventory obligations, full circularity and product passporting. This presents significant opportunities for Türkiye, the closest and largest producer to Europe. Finally, if the Russia-Ukraine war ends and peace is established in the Middle East, we can regain lost exports in these markets. However, in order to utilise these opportunities, we need support that will enable us to maintain our production power, strengthen our own resources and regain our competitiveness. If these are achieved, the recovery in the industry will not be limited to exports; employment will increase again and imports will decrease.”
Dr Ümit Özüren: “The only way to increase unit price is branded exports”
TGSD President Dr. Ümit Özüren said that the Turkish apparel industry managed to keep its share in the global apparel trade at the level of 3.48 percent despite going through the most challenging period of the last 40 years, adding: “When compared to the 1.08 percent share of our country from world trade, the importance of our industry’s 3.48 percent share is once again revealed. On the other hand, the export unit price of our sector in 2024 was 15.2 dollars per kilogram. We are the third industry with the highest value after jewellery and defence industry. It is not easy to exceed this value due to high price competition in the market. The only way to increase the price is branded exports. In fact, a wholesale brand can increase the product value by 2-2.5 times. In branded sales made in retail or e-commerce channels, the average unit sales value reaches 80-100 dollars. This is only possible if companies invest in innovation, design, branding and digital transformation processes, and comply more with processes such as traceability, transparency and ESG criteria.”
Stating that they, as TGSD, are also working on the preparation of the Horizon 2040 Strategic Plan, which will shape the long-term goals of the sector: “We are also planning to launch the TGSD Development Academy, which we have designed as an online information platform that will provide guidance in areas such as institutionalisation, sustainability and innovation within the industry, in this year.”
The expectations and demands of the Turkish apparel industry are listed as follows:
- The exchange rate should move in parallel with inflation and be brought to its real value or exporters should be given foreign currency conversion support of 10 percent of their net exports.
- The melting working capitals should be completed with long-term loans with a variable interest rate of half of the reference interest rate, and the collection of interest in rediscount loans should be made at the end of the period.
- The support of 2,500 TL per employee given to SMEs in labour-intensive sectors should be given to all companies regardless of scale. Work should be done for a regional minimum wage or the support for minimum wage should be organised according to regional development.
- Eximbank credit supports should be increased to 16 percent of the total export value as in 2018, maturities should be extended, and the limits of exporters should be increased with CGF and other arrangements.
- In order to ensure compliance with the EU Green Deal, the problems preventing industrialists from obtaining licences for SPP investments should be solved.
- New incentive mechanisms should be created to encourage businesses to increase their scale.
- Micro-export and VAT refund processes should be facilitated in order to sell to neighbouring countries through online channels; arrangements should be implemented to reduce customs clearance and transport costs.
- Supports should be provided to ensure the return of know-how and labour force lost with EYT (Victims of Delayed Pension Age) to enterprises, and SSI premium should not be collected from retired employees to prevent informality.
- In order to ensure women’s participation in the labour force, SSI premiums of women whose husbands are included in the social security system and who are not in working life should not be taken for 3 years.
- Local governments and ministries should make nursery investments in every district and neighbourhood in accordance with the needs to ensure women’s participation in the labour force.