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PERFECTLINK SURVEY ON COMPETITIVENESS
COUNTRY REPORT
BULGARIA
BATEK LFFHI
BULGARIAN TEXTILE / CLOTHING & BULGARIAN LEATHER /SHOES ASSOCIATIONS
(ACCORDINGLY)
AUTHORS: TODOR BOZVELIEV CONCERNING LEATHER/SHOES AND COMMON PARTS
EMILIYA ZAKOVA CONCERNING TEXTILE / CLOTHING
DATE: 30 JUNE 2005S O F I A
National Report on PERFECTLINK Survey on Competitiveness
I N D E X
PAGE
1. Analysis of National Statistics3
1.1. Leather / shoes3
1.1.1.Concerning Emploees in skins and hides production and articles from them.3
1.1.2.Concerning Production of the following products (articles)3
1.1.3.Concerning Import:4
1.1.4. Concerning Export 6
1.1.5. Concerning internal market sales (wholesales):7
1.1.6. Investments in long term materialassets7
1.2. Textile/clothing7
1.2.1.. Analysis of National Statistics 7
2. National Questionnaires Survey Results 9
2.1. Leather / Shoes9
2.1.1. Profile of the companies operating in the sector.9
2.1.2. The main observations and fillings concerning competitiveness of the companies in according to their
managers who as already have mentioned above are in their majority owners of the same companies.9
2.1.3. China’s competitors as specific problem.10
2.2.Textile / Clothing 13
2.2.1.National Questionnaires Survey results 13
3. SWOT analysis of the sector17
3.1. SWOT analysis of Leather/ Shoes sub sector17
3.1.1.Strengths:17
3.1.2.Weaknesses:17
3.1.3.Opportunities17
3.1.4.Threats:18
General conclusions issuing from the SWOT analysis18
4. Questionnaires results19
4.1. StatisticsSurvey on Competitiveness in the Textile/Clothing and Leather Sectors of
the New Member Countries and Bulgaria and Romania19
4.1.1. Production retail sales consumer prices19
4.1.2. Import and export in the 10 participating countries21
4.1.2.1. Imports21
4.1.2.2. Exports24
4.2. Questionnaires results of company questionnaires in the 10 participating countries25
4.2.1. Companies profile:26
Conclusions part one27
4.2.2. General awareness on competitiveness27
Conclusions part two28
4.2.3. The Chinese issue29
Conclusions part three32
4.2.4. The future32
Conclusions part four35
5. The European framework: the European commission support policy and programs35
5.1. Textile and clothing sector35
5.2. Leather sector37
6. Governments plans for supporting the textile and leather sector.39
6.1. Governments plans for supporting the leather sector.39
6.2. Governments plans for supporting the textile sector.39
7. Proposals for a national strategy of textile and leather sub sector.40
7.1. Proposals for a national strategy of leather sector (Practically the written bellow shows the newest ideas
created after the Workshop).40
7.2. Proposals for a national strategy of textile sub sector.41
1.Analysis of National Statistics
1.1. Leather / shoes
GENERAL INFO FOR THE SECTORLEATHER, LEATHER GOODS AND SHOES
That sector is one of the oldest in Bulgaria. It has long year’s traditions in production. The sector has production capacity and experienced high skilled workers and specialists. The last fact is a good base for its development.
There are possibilities to increase external and internal markets. The stable macro-economic frame in the country during the last years, relatively low inflation, increase the volume of the production and flat increase of average working salary are proving that.
ANALYZIS OF THE MOST IMPORTANT STATISTISAL DATA CONCERNING THE
BRANCH:
The collected data, their processing results and their analyzing permits to make the followingbelow comments and conclusions:
1.1.1.Concerning Emploees in skins and hides production and articles from them.
YEAR / № OF EMPLOYEES1989 / About 34000
2001 / 20879
2002 / 20722
2003 / 19856
2004 / 19632
Comments:
1.1.1.1.If compare the employment to that one in the very beginning of the transition period when the total number of employees was about 34 thousand people, at the end of the last year we could see shrinkage of the employment with about 40%.
1.1.1.2.Independently of bad economical situation the number of employees during the surveyed period (last four years) is relatively stable – the full decrease is only 7%.
1.1.2.Concerning Production of the following products (articles):
1.1.2.1.Concerning Production of Leather and double faced:
LEATHERand FURThousands. Sq. Decimeters
2001 / 212851
2002 / 131761
2003 / 111870
Comments:
1.1.2.1.1.Permanetly decreases the volume of production.
1.1.2.1.2.Effectivness of one employee therefore decreases too. (That is as sequence of the fact that the number of employees is relatively stable).
1.1.2.1.3.The capacity is used under 50%.
1.12.1.4.If this trend is kept that means we should expect a chain of bancruptcis in the branch.
1.1.2.2. Concerning Production of Footwear:
ASSORTIMENT GROUP / MEASURE UNIT / 2001 / 2002 / 2003MEN’S / Thousand units / 1006 / 916 / 1208
DAMES’ / Thousand units / 802 / 805 / 1770
CHILDRENS’ / Thousand units / 151 / 1121 / 504
SPORTS’ / Thousand units / 959 / 453 / 406
OTHERS / Thousand units / 1294 / 2091 / 2821
TOTAL / Thousand units / 4212 / 5386 / 6709
Comments:
1.1.2.2.1.The data shows significant increase, but that is somehow tricky because the real increase concerns only the group of home shoes.
1.1.2.2.2.More serious is the increase of women’s shoes but that group is concerned from the mass import from China and Turkey as well.
1.1.2.3.Concerning Production of Details for shoes.
DETAILES FOR SHOESIN VALUENDICATOR BGN
YEAR / VALUE
2001 / 69299
2002 / 6590
2003 / 27453
Comments:
1.1.2.3.1. In the production of details for shoes a decrease of 10 times in the volume between the 1st and 2nd year of analysis is shown.
1.1.2.3.2.The decrease is followed by the partial restitution in the 3rd year of analysis. In spite of all the decrease of more than 2 times is shown for the analyzed period.
1.1.2.4 Concerning.Production of Soles.
SOLES ThousandsPCS
YEAR / QUANTITY
2001 / 1044
2002 / 5184
2003 / 3060
Comments:
1.1.2.4.1. In regards to the production of the soles in spite of the fluctuation a process of growth is observed.
1.1.2.5. ConcerningProduction of Leather and Fur clothing:
LEATHER CLOTHES.YEAR / QUANTITY
2001 / 43
2002 / 28
2003 / 32
Comments:
1.1.2.5.1. Started trend of increase but and for that group is valide the problem with mass import from China and Turkey in majority unreglamented.
1.1.2.6. Concerning Production of Haberdashery.
Haberdashery ArticlesThousand Pieces
YEAR / QUANTITY
2001 / 303
2002 / 990
2003 / 686
Comments:
1.1.2.6.1. There is a considerable increase in the haberdashery articles production (in kinds) - for the analyzed period is above 2 times.
1.1.3.Concerning Import:
1.1.3.1.Concerning Import of Skins and hides in natural indicators.
Type of skins or hides / Measure unit / YEAR2001 / 2002 / 2003
Buffalos’,cows’ etc. / Thsnds sq. dm / 108618 / 77054 / 47467
Sheep’s and goats’ / Thsnds sq. dm / 9737 / 13134 / 4232
Swine’s / Thsnds sq. dm / 94 496 / 41 573 / 60171
TOTAL / Thsnds sq. dm / 212851 / 131761 / 108870
Comments:
1.1.3.1.1. A considerable decrease in the buffalos’, cows’, etc. in production of hides.
1.1.3.1.2. For the sheep’s’ and goats’ skins production there are significant fluctuations with a negative meaning.
1.1.3.1.3. In case of swine’s skins also are variations in the production.
1.1.3.1.4. The fluctuations in import of swine’s skins are not so clearly expressed as it is concerning the buffalos’ and cows’ hides.
1.1.3.1.5. As a whole the import for the period is with trend of decrease (Almost twice).
1.1.3.2.Concerning Import of Skins and hides in value.
IMPORT OF LEATHERIN TONES / IMPORT OF LEATHER
IN THOUSANDS EURO
YEAR / QUANTITY / YEAR / VALUE
2001 / 7618 / 2001 / 88116
2002 / 6980 / 2002 / 86291
2003 / 7352 / 2003 / 101307
2004 / 5970 / 2004 / 88683
Comments:
1.1.3.2.1. A considerable fluctuation in the value of the imported skins is shown.
1.1.3.2.2.If we estimate skins’(hides’) import per prearranged skin (hide) unit for the period is shown an increase from 11.57 Euro to 14.85 Euro (28%).
1.1.3.2.3.If analyze more deep the conclusion 3.2.2. could say that a trend to import more expensive skins is available.
1.1.3.2.4 Significant changes in the importing countries to BG are not shown – mostly the skins are imported from Italy, Turkey and Greece. Some sporadically imports are observed from Pakistan, Poland, Romania, India, Russia, etc.
1.1.3.3.Import of shoes s in natural indicators.
№ / 2001 / 2002 / 2003 / 20041 / Turkey / Italy / Italy / Italy
2 / Italy / Turkey / China / China
3 / China / China / Turkey / Turkey
4 / Greece / Greece / Greece / Greece
5 / France / France / Austria / Austria
6 / Germany / Germany / Slovakia / France
7 / Romania / Spain / Hungary / Spain
8 / Poland / Poland / France / Hungary
9 / Spain / Great Britain / Spain / Vietnam
10 / Portugal / Romania / Vietnam / Hong Kong
IMPORT OF FOOTWEAR
IN TONES / IMPORT OF FOOTWEAR
IN THOUSANDS EURO
YEAR / QUANTITY / YEAR / VALUE
2001 / 11182 / 2001 / 55677
2002 / 13490 / 2002 / 59681
2003 / 16083 / 20003 / 74476
2004 / 17485 / 2004 / 78675
Comments:
1.1.3.3.1. The import of footwear in tons is increase with 56%..
1.1.3.3.2. Significant changes in the importing countries to BG are not shown – typically they are Turkey, Italy and China.
1.1.3.4.Import of Shoes in value.
IMPORT OF SHOES IN VALUE INDICATOR(THOUSAND EURO)
YEAR / VALUE
2001 / 55677
2002 / 59681
2003 / 74476
2004 / 78675
Comments:
1.1.3.4.1.The import in value is increase with 41%
1.1.3.4.2. As similar increase (56%) is available in natural indicator (tons)could say that a unit of ton imported footwear varies slightly
1.1.3.4.3. As sequence of conclusion 3.4.2. Wecould say that this indicates import of cheaper footwear.
1.1.4. ConcerningExport
1.1.4.1.Concerning Export of Skins and hides in natural indicators.
EXPORT OF SKINS & HIDES IN TONESYEAR / QUANTITY
2001 / 10779
2002 / 11317
2003 / 13137
2004 / 12887
Comments:
1.1.4.1.1. The skins’ and hides’ export in tons stays relatively stable.
1.1.4.2.1.There is a trend to increase (about 20%)..
1.1.4.2.Concerning Export of Skins and hides in value.
EXPORT OF SKINS & HIDES IN THOUSAND EUROYEAR / VALUE
2001 / 28871
2002 / 25362
2003 / 22465
2004 / 20568
Comments:
1.1.4.2.1. The skins’ and hides’ export in value decreases.
1.1.4.2.1.The decrease in value (Euro) compared to the decrease in natural indicator (tons) is 1.5 times bigger.
1.1.4.2.3.Deeper analyze of previous conclusions and facts permits to say that the price of a prearranged skin export unit becomes smaller
1.1.4.2.4.The previous is right if in the declaration are posed the trough figures (prices).
1.1.4.3.Concerning Shoes in natural indicators.
EXPORT OF SHOES IN TONESYEAR / QUANTITY
2001 / 13165
2002 / 12693
2003 / 15167
2004 / 14580
Comments:
1.1.4.3.1.The export of footwear in tons stays stable with a trend to increase.
1.1.4.4.Concerning Shoes in value
EXPORT OF SHOES IN THDS. EURO / EXPORT OF SHOES IN TONESYEAR / VALUE / YEAR / QUANTITY
2001 / 178775 / 2001 / 13165
2002 / 171714 / 2002 / 12693
2003 / 200467 / 2003 / 15167
2004 / 187801 / 2004 / 14580
Comments:
1.1.4.4.1. The export in value increases.
1.1.4.4.2. The comparison between export expressed in natural indicator (tones) and export expressed in value indicator (Euro) shows slight decrease of about 5 %.
1.1.5.Concerning Internal market sales (wholesales):
SELLING OF LEATHER AND FUR CLOTHING ONINTERNAL MARKET IN BGN / SELLING OF FOOTWEAR ON INTERNAL MARKET IN THOUSAND EUROS
YEAR / VALUE / YEAR / VALUE
2001 / 97789 / 2001 / 45460
2002 / 100602 / 2002 / 47921
2003 / 238900 / 2003 / 118875
Comments:
1.1.5.1. A significant growth in the selling of the leather and fur clothing in the internal market is shown – about 2.5 times
1.1.5.2. Increase is indicated also in the footwear selling – about 2.1 times.
1.1.6. Investments in long term materialassets
Investments in long-term assets / Million BGN / 2001 / 2002 / 2003For Bulgaria Total / Million BGN / 6694,30 / 7220,50 / 8503,10
For the branch / Million BGN / 16,30 / 14,50 / 11,50
Share / % / 0,24 / 0,20 / 0,14
Comments:
1.1.6.1.Until the investment in long term assets in Bulgaria marks increase, in the leather sector is recorded decrease of 40%.
1.1.6.2.The total long term assets’ share of the sector also decreases with 0.10%.
1.1.6.3.On the base of previous two could say that the sector is in the situation of crisis. (Or at least the sector is in the beginning of crisis).
1.2.Textile/clothing
1.2.1. Analysis of National Statistics
THE GENERAL ECONOMIC MILIEU for the period is characterized with : monetary council governance, strong fiscal discipline in the year 2004 in the country.
• Cumulated inflation for the period : 6,1%
• Unemployment rate : 12,67%
• Industrial production growth 22,3% , compared to 2003г., industrial sales growth - 33,2%
• Individual consumption growth : 4,4%
• According to a preliminary data, the direct foreign investments in Bulgaria for this period are 2487,5 Mio USD, the growth is 18,6% compared to 2003. The essential part of these was used for environment protection and safety at workplace measures.
• Bulgarian exportation data for 2004 are 15,6 billions BGN, importation - 22,7 billions BGN, the importation was 45% higher than exportation. Exportation growth was 20%, importation growth – 20,9% compared to 2003.
• The main trade partner of the country as economic zone in the EU-25. The tendency for growth of the commercial exchange with ICO was kept .
DEVELOPMENT OF TEXTILE AND CLOTHING ACTIVITY
The positive tendency for the development of the textile production in Bulgaria is continuing. The macroeconomic efficiency of textile and clothing products exchange in continuously growing. The positive balance in 2004 compared to 2002 in 1,7 times higher. The index of the textile and clothing production in the last years is as follows :
• 2000 – 112,8%
• 2001 – 118,5%
• 2003 – 118,5%
The physical sales volume /juxtaposed prices/ in 2004 compared to 2000 was more than twice higher.
The fabrics importation in Bulgaria is growing with 8% in 2004 compared to 2003.
The major part of the imported fabrics was for out word processing, exported after changed.
EXPORT-IMPORT AND THEIR DYNAMIC DEVELOPMENT
The rate of imported product at lower prices was growing. The average prices were 5% lower in 2004 compared to 2001.
Dynamic was observed in the field of fabrics exportation from Bulgaria. The exported goods growth was 27% higher in 2004 compared to 2003.
The rate of lower prices products in the exportations was much more growing. The average prices in 2004 were 43% lower compared to 2001.
• Internal market – the sales incoms index in the T/C sector in 2004 was 110,3 compared to 2003.
An essential part of products exchange with the EU-Countries consists of yarns, fabrics, leathers and final products.
The main partners of our country were : Italy, followed by Germany, Greece and Turkey. The exportations to Italy were 13% of the Bulgarian total exportations.
The textile products were among the first ten groups.
Текстилните стоки са в челната десятка на изнасяните стоки.
The main partners in the import in 2004 were Germany, Russia and Italy with common rate of 37%.
• The group products export data in 2004 were :
“60” knitted fabrics – 28,5 millions BGN
“61” knitted clothing and accessories – 1165 millions BGN .
“62” clothing and accessories, different from knitted – 1581,77 millions BGN.
Internal market
In 2003 , 38% of the textile products producers incomes were from the internal market sales. In 2004 this rate was decreased to 30%.
EMPLOYMENT TENDENCY
• Number of the employees in the sector : :
2000 2001 2002 2003 2004
Textile and Clothing 128377 146893 152237 161752 172013
The growth of the employees in the textile and clothing sector was 10000 persons compared to 2003 and represented 8,16% of the total country employment of 2.109.478 in December 31st, 2004 and 10,4% of the employees in the production sphere.
The rate of the employed in the clothing sector was 139.403 persons, about 80% of them were in SMEs.
• Investments importance
In the T/C sector the net amount of the direct foreign investments flux was : 10516,7 th. USD in 2004; 7167,9 th. USD in 2003, i.g. the growth was 46%.
• The influence of the environment legislation over the industrial activity and enterprises costs
We are yet observing the positive influence of the introduced EU environment legislation over environment and healthy and safety labour conditions.
13,7% of the investments in 2004 were destinated to environment protection, safety measures e.o.
2.National Questionnaires Survey Results
2.1.Leather / Shoes
Competitiveness of leather and shoes sectors in Bulgaria have been examined trough survey questionnaires disseminated among 200 companies from total known operating in the field about 486. From asked to answer the questionnaires companies, a group of 163 respond on the request. Those 163 companies are owners of majority of assets in the sector and main shareholders of the Bulgarian markets of related products. Therefore from the mentioned until now could concern the results of survey as quite statistically representative.It is important to remark that the managers who answered the questionnaires are in their prevailed number owners of the companies which are primary SMEs.
The collected data, their processing and analyze of the received results permit to make the following
Comments and conclusions:
2.1.1. ConcerningProfile of the companies operating in the sector.
Apportionmentby products % / Apportionment
(by origin)% / Apportionment by size
(turnover) % / Apportionmentbysize
(number of employees)
Leather / 9 / Own production / 92 / Turnover 5-20 Mln Euro / 6 / Less then 10 persons / 23
Leather products / 79 / External issue / 8 / Turnover < 5 Mln Euro / 94 / Between 10 and 50 persons / 59
Others / 12 / Between 50 and 250 persons / 16
More than 250 persons / 2
Comments:
2.1.1.1.The questionnaire have been made among companies –producers, which take care for the selling themselves.
2.1.1.2.There weren’t included trade chains, but there is potential to develop such links.
2.1.1.3. Ninety eight (98) % of the companies are SMEs if use as indicator the number of employees.
2.1.1.4. That fact is confirmed and if use as indicator the turnover of the studied companies.
2.1.1.5. The eventually developed strategy on the competitiveness of the sector should take into consideration the fact in 1.3. (Other words should be developed to support first of all SMEs).
2.1.1.6. Should find tools to consolidate the potential of the sector.
2.1.1.7. At the moment of survey % is internal market.
2.1.1.8.After the assessment of Bulgaria to EU and in the process of integration, if keep the structure of the markets the internal market will increase up to 93 %.
2.1.1.9.After the assessment of Bulgaria to EU and in the process of integrationthe competitive pressure will increase and from countries members of EU 25 as then that will be for them internal market as well.
2.1.2. Concerning the main observations and fillings connected to competitiveness of the companies in according to their managers:
2.1.2.1. Concerning Apportionment by the markets:
Trends of sellings in natural indicator(% of answers) / Trands of sellings by value
(% of answers)
Increase / 36 / Increase / 35
Decrease / 18 / Decrease / 18
Without changes / 46 / Without changes / 47
Comments:
2.1.2.1.1. Trends of selling in natural indicator and in value are the same.
2.1.2.1.2. Only about 1/3 of companies show trend of grow up.
2.1.2.1.3. As the volume in value indicator and the volume in natural indicator increase with practically equal percentage 36% (35%) could say thatthere is de - capitalization although of that relatively most successful companies
2.1.2.2. ConcerningStrength of the companies (Does the business understand the need of changes?).
Does the business understand the need of changes?(as % of the answers)
No changes / 5
Small changess / 61
Basic changes / 34
Comments:
2.1.2.2.1. About 95 % of the surveyed companies understand the need of changes.
2.1.2.2.2. In the condition of available psychological readiness for changes, if develop adequate strategy for sustainable and balanced development of the sector and guidelines for its realization, there is opportunity to realize the strategy in appropriate terms and quality.
2.1.2.3.Trends of development of competitiveness during coming 2 years compared to the present one.
Trends will be:(as % of the answers)
Stronger / 44
Weaker / 6
Similar / 50
Comments:
2.1.2.3.1. Probably there is some misunderstanding of the question matter or lack of information needed for realistic assessment, because is underestimated the competitive pressure by the EU countries.
2.1.3.Concerning China’s competitors as specific problem.
2.1.3.1. Share of concerned companies
Share of concerned companies(as % of the answers))
Concerned / 86
Don't concerned / 14
Comments:
2.1.3.1.1. Eighty six (86) % e.g. the majority of the companies have been concerned by the China’s competitors.
2.1.3.2. Character of consequences from China's Competitive invasion:
Character of consequences will be:(as % of answers)
Loose of clients / 47
Selling decrease / 26
Decreace of quntities produced and selling prices / 14
Seling prices decrease / 9
Others / 4
Comments: