Bringing Georgian Apparel to Europe
The project has already conducted a comprehensive study of the apparel sector and elaborated concrete set of recommendations. The process proceeds in close cooperation with the Ministry of Economy and Sustainable Development of Georgia and Entrepreneurship Development Agency – leading partner institutions within the Government of Georgia that are heavily invested in promoting Georgia as a leading apparel producing country for the European market. The common understanding is that existing investment promotion policies and incentives shall be continued and focused on the European markets, encouraging appropriate quality and standards among apparel producing companies.
“The Government of Georgia stands by Georgian textile and apparel producers in opening for them international channels of interaction with companies and buyers in Europe and beyond and supports further internationalization within the industry. By means of “Produce in Georgia” initiative we are already offering concrete incentives for boosting apparel production. Moreover, Georgia is rich in creative talent – Georgian designers work with the world’s leading fashion brands and such events as Tbilisi Fashion Week and Mercedes-Benz Fashion Week Tbilisi have already put our country on the international fashion map. We promote the notion of making Georgia a leading locale for apparel and fashion industries and seek to turn them into profitable businesses.” – says Ketevan Botchorishvili, Deputy Minister of Economy and Sustainable Development of Georgia.
Apparel production has increased significantly from 2008, with production of approximately GEL 23 million, to 2015 with over GEL 140 million (approximately USD 60 million) in production, representing a compound annual growth rate (CAGR) of about 30.3% for the period.
With an active inflow of FDI into Georgia’s apparel sector since 2009, the export of apparel produce has seen dynamic growth, increasing 3.6x by 2015. Overall, exports increased from USD 24.0 million in 2009 to USD 86.7 million in 2015, representing a CAGR of 23.9%, which is less than the CAGR for total production, suggesting that the excess growth in production is being driven by domestic demand, which reduces the Georgian consumers’ reliance on imported apparel.
Georgia’s primary export market has been, and continues to be, Turkey, which usually further processes Georgia’s exported apparel products further (a “value added” contribution) and integrates them into EU value chains as a Turkish product. However, Georgian producers have been diversifying its export markets and reducing its reliance on Turkish end buyers, which is represented by the share of products exported to Turkey declining from 86% in 2009 to only 72% in 2015. Besides Turkish apparel companies, such brands as Germany’s Lebek and the French-Italian Moncler are already sourcing their production in Georgia.
Georgia needs internationally accepted framework conditions to be competitive with other markets and attract foreign investors and buyers to this sector. In terms of overall conditions, Georgia steadily upholds the reputation of a country with highly favorable business environment - the World Bank’s "Doing Business 2017" ranks Georgia 16th on the ease of doing business. With the DCFTA in place, which provides for a closer economic integration of Georgia with the EU and removes all import duties on goods, Georgian companies are now opened up to the new opportunities of accessing EU market. With respect to the path of Georgian apparel companies to Europe, one key objective will be to receive a license for apparel export “Made in Georgia”.
SME DCFTA GE is now on the stage of selecting three companies for introduction of international standards of production that will help Georgian producers to adopt necessary practices needed to obtain safety standards certifications. This is a pilot endeavor that will test the ground for further expansion and potential development of apparel production cluster in Georgia that will fully comply with established international standards of production.
The "SME Development and DCFTA in Georgia" project is co-financed by the European Union and implemented by GIZ. The project assists Georgian SMEs to become more competitive and adapt to the new regulatory environment created under the free trade agreement with the EU (DCFTA).
The project is part of European Union's EU4Business Initiative, which helps SMEs to benefit from DCFTA by improving business environment, increasing knowledge and skills of businesses, and by supporting SMEs to get better access to finance. More information on www.eu4business.eu