PROJECT BG161РО , PROMOTION OF THE INTERNATIONALIZATION OF THE BULGARIAN ENTERPRISES

Transcription

1 R E P U B L I C O F B U L G A R I A Bulgarian Small and Medium Enterprises Promotion Agency PROJECT BG161РО , PROMOTION OF THE INTERNATIONALIZATION OF THE BULGARIAN ENTERPRISES Проект BG161РО , НАСЪРЧАВАНЕ НА ИНТЕРНАЦИОНАЛИЗАЦИЯТА НА БЪЛГАРСКИТЕ ПРЕДПРИЯТИЯ This project is financed by the European fund for regional development through an Operational programme Development of the competitiveness of the Bulgarian economy Този проект е получил финансиране от Европейския фонд за регионално развитие чрез Оперативна програма Развитие на конкурентоспособността на българската икономика EXPORT STRATEGY Manufacture of textiles and textile products June 2012

2 LIST OF ABBREVIATIONS EU European Union BSMEPA Bulgarian Small and Medium Enterprises Promotion Agency MAF Ministry of Agriculture and Food MEET Ministry of Economy, Energy and Tourism MRDPW Ministry of Regional Development and Public Works SME Small and Medium-size Enterprises ITC International Trade Centre NCEA National Classification of Economic Activities NSI National Statistical Institute OP Operational Programme OTEA Office of Trade and Economic Affairs 2

3 CONTENTS INTRODUCTION APPROACH TO THE DEVELOPMENT OF THE EXPORT STRATEGY MAIN CONCLUSIONS OF THE ANALYSIS OF THE CURRENT SITUATION SWOT AND LOED ANALYSIS OF SECTOR "MANUFACTURE OF TEXTILES AND TEXTILE PRODUCTS" VISION AND OBJECTIVES STRATEGY FOR PROMOTING THE EXPORT OF SMES IN SECTOR MANUFACTURE OF TEXTILES AND TEXTILE PRODUCTS ACTION PLAN MONITORING AND CONTROL SYSTEM

4 INTRODUCTION This export strategy for sector "Manufacture of textiles and textile products" has been developed within Project BG161RO "Promoting the internationalization of Bulgarian Enterprises", Priority Axis 4 "Strengthening the international market positions of Bulgarian economy" of Operational Programme "Development of the Competitiveness of the Bulgarian Economy", pursuant to contract BG-161PO C00001 for providing direct grants under which the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA) is an institutional beneficiary. The objective of the Export Strategy for sector Manufacture of textiles and textile products is to provide support to the Bulgarian micro, small and medium-sized enterprises in the sector to enhance their competitiveness, degree of internationalization and entering or expanding the market positions of the Bulgarian products and particularly of these with higher value added. The Bulgarian state, represented by BSMEPA, the Ministry of Economy, Energy and Tourism (MEET) and other state institutions has identified the SME sector as particularly sensitive and at the same time as having crucial importance for economic life, deserving special attention. The diversity in the development of different economic sectors and the place of SMEs therein, as well as the national priorities related to the promotion of national exports, require the development of export strategies for particular sectors, one of them being the sector of Manufacture of textiles and textile products. Focusing of the support and defining of precise benchmarks for state intervening through its institutions, on the one hand, and providing options for development to other participants in the process, on the other, will strengthen in a positive way the planning aspect of state activities and will at the end improve the performance of the sector. The successful implementation of the Export Strategy is expected to result in improvement of the process of going international and of the active expanding and strengthening of market positions of Bulgarian SMEs producing textile products. In developing the Export Strategy for sector Manufacture of textile and textile products, the "Methodology for Strategic Planning", drafted by the Council for Administrative Reform to the Council of Ministers of the Republic of Bulgaria, is taken into account. 4

5 1. APPROACH TO THE DEVELOPMENT OF THE EXPORT STRATEGY The export strategy for sector Manufacture of textiles and textile products is a strategic document, setting the mid-term objectives and priorities in the development of SMEs export. It has been developed on the basis of the strategic planning approach and with the participation of stakeholders, which has the following advantages: Ensures good comprehension among the stakeholders for the trends and what the future could bring; Creates general vision and consensus among the stakeholders, coordinating the various initiatives under the chosen objectives; Identifies the projects and actions undertaken or planned; Strengthens the partnership among the government bodies, the business and other parties for solving complex problems. When developing such a strategic document it is extremely important to precisely formulate the owner of the strategy, i.e. the institution or institutions responsible for the overall implementation of the strategic document, as well as for the different stages of the strategic planning. Generally, the development of strategic documents includes the following stages: Assignment Preparation Development Coordination Adoption Implementation Evaluation Update Each of these stages contains specific activities, some of which, such as assignment, preparation, development, coordination, adoption, and update at a later stage, are part of the project, implemented by the contract mentioned above. Consequently, the main owner of the export strategy is the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA). For this reason, the goals, measures and actions set in the strategic document must first help BSMEPA improve the planning and implementation of activities related to the support of exports of SMEs in sector Manufacture of textiles and textile products. This formal logic does not contradict to the fact that a significant number of institutions, businesses and even the population are involved as stakeholders and they might be influenced by means of different mechanisms, for example, the state institutions through the forms of coordination of strategic documents of such rank, and the branch associations and businesses by providing incentives to increase their export potential. It is of extreme importance for SMEs in the sector of Manufacture of textiles and textile products to be able to see a clear 5

6 and predictable export supporting state policy, which, though in the medium run, will allow them to decide whether to benefit or not from the created opportunities. Technology of strategic planning The strategic planning process includes the following steps: Identification of the stakeholders Analysis of the environment SWOT analysis Vision Goal setting Selection of an alternative a development strategy Action plan Monitoring system Each of these steps is characterized by some specifics, namely: Identification of the stakeholders. A stakeholder is any person or group, that requires attention, can influence certain decision, may contribute with resources or may be affected by given decision. The involvement of stakeholders at an earlier stage of the strategic document development may lead to better expressed consensus on the targets and greater readiness to support the decisions. The stakeholders of the Export strategy may include different people and organizations: companies, government bodies, manufacturer associations, individual businesses, consumers of respective products, NGOs and experts. The specifics of developing business supporting strategies is that prepared documents shall not favour some and/or discriminate other businesses. This is the reason why there was a pursuit for equality when involving business organizations and different branch associations, as well as a search for an opportunity that the majority of businesses could benefit from the analysis made. Analysis of the environment. The analysis of the environment (the conclusions of which serve as a basis for the SWOT analysis) allows the formulation of goals and priorities which shall align the efforts and shall not be dissociated from time and environment. The analyses are focused at: The current state of development of sector Manufacture of textiles and textile products in Bulgaria, trends, dynamics, and growth; Characteristic of export-orientated SMEs, including regional distribution; Condition of the export of goods and services; Analysis of goods and services in sector Manufacture of textiles and textile products with export advantages and export potential; Estimation of productions, which have the biggest added value growth potential in exporting goods and services, where Bulgaria has global market share; Size of the international market; Competitiveness of the export of goods and services, for existing and for potential foreign markets; Share of the products made in Bulgaria; 6

7 Share of the Bulgarian export for the product group in the total volume of exports on the global market; Leading importer-countries in the sector; Values and volumes of imports on particular foreign markets for certain product group; Main suppliers on the corresponding market; Identification of barriers to the internationalization of enterprises from sector Manufacture of textiles and textile products and measures for their overcoming. Based on these analyses, the current problems and achievements of sector Manufacture of textiles and textile products should be identified, and prognoses, opportunities and prospects for development shall also be motivated, such as: Achieving a significant growth of Bulgarian goods in total, and particularly of those with higher value added; Identification and prioritization of target markets by commodity groups; Prognosis for the development of export and import of goods and trade balance for the next five and more years. The analyses are based on available analytical and programme documents, accessible statistical information, as well as information from conducted surveys interviews and focus groups. The analysis of the environment traces out the state-of-affairs of SMEs in sector Manufacture of textiles and textile products and the export process, identifies the reasons provoking problems in the development and sets the guidelines for future development. SWOT analysis. The SWOT analysis gives the opportunity to identify the main internal factors, differentiated as strengths and weaknesses and the external factors opportunities and threats, helps formulating the strategic objectives, priorities and measures. The use of SWOT protects from setting unreachable objectives and priorities for the export development of SMEs in sector Manufacture of textiles and textile products within the Strategy period. Using SWOT analysis in the development of the Export Strategy has some specifics, as though BSMEPA is the strategy owner, the analysis is focused on the export process of SMEs in the sector and not the institution itself. LOED analysis. The LOED analysis is a tool, showing how to build on the strengths and to overcome the weaknesses, how to use the opportunities and to protect against threats, identified by means of the SWOT analysis. Goal setting. The strategic planning is focused on the issues of critical importance, opportunities and problems, faced by the export of SMEs in sector Manufacture of textiles and textile products. It helps to distinguish really important decisions from decisions with temporary effects. The definition of the general strategic goal is extremely important for the future development of the export of SMEs in sector Manufacture of textiles and textile products as it reflects the view of institutions and business for the future. The general strategic goal seeks to find an answer to one basic question How do the main institutions and stakeholders in the process want the export of SMEs look like in the long-term period? 7

8 Goal setting, by establishing a hierarchical tree of goals, is a working tool that allows detailing of the most common general goals to specific ones. Reaching the level of specific goals makes it possible to answer the questions about who, what and when, so as to guarantee the achievement of the set general goals. Selection of an alternative a development strategy. Once objectives are defined, ways are sought how to achieve them. Practice shows that this may be done through different ways, representing different alternatives for development and achievement of the set objectives. At this stage of strategic planning, various alternatives are evaluated by different points of view and criteria, and as a result one alternative is chosen, which is to become a development strategy. Action plan. The chosen strategy is to be supported by certain activities and measures, bound by deadlines, people in charge, performers and financial resources. The Action plan and the related measures therein transform this strategic instrument into daily work and implementation of the policy for supporting the export of SMEs in Manufacture of textiles and textile products. Monitoring system. The last stage of the strategic planning process is the monitoring and evaluation of the progress of implementing the general and specific objectives, laid down in the export strategy and in the action plan. Monitoring is important as it allows taking corrective actions, provided that progress is unsatisfactory or conditions change. It is also important that the progress in achieving general objectives is reported to the public and the business, so that they can estimate the work of relevant institutions and stakeholders in the implementation of the strategy. It should be noted that often the effects may not be visible or apparent, which hampers their measurability. Moreover, the impact is often a cumulative effect, and this may complicate further the analysis. This gives particular weight to monitoring, which is closely related to all stages of implementation of the Export Strategy - preliminary (ex ante), current (parallel with implementation) and subsequent (ex post) evaluation. In order to monitor the export strategy implementation and to evaluate the results achieved in terms of the set goals, it is necessary to use a set of indicators related to the implementation of the strategic document, that are to be determined preliminary or early enough, as to use the data obtained thereof. In most of the cases these will be target values, which in aggregate will correspond to the objectives of the strategic document. Monitoring provides the feedback, helping to render account about the success or failure of the planning document. In order to perform the monitoring process is it necessary to define: Measurable indicators (what is to be monitored) Frequency of monitoring and evaluation (when the relevant reports will be prepared). Responsibilities, related to monitoring and evaluation (who does what), and competences for decision-making on changes (update of the strategic document). INFORMATION SOURCES At developing the export strategy the following main information sources have been used: National Statistical Institute; 8

9 Information, provided by BSMEPA; Information from the Ministry of Economy, Energy and Tourism; EUROSTAT; International Trade Centre; Published information related to international forums and meetings; Official electronic information sources; Information, published by Branch associations in the sector; Information by the Bulgarian Industrial Association and the Bulgarian Chamber of Commerce and Industry, as well as their regional divisions; Information from company survey, carried out in the period October 31 November 28, 2011, with the senior management of 5 micro, 10 small and 4 medium enterprises (total of 19), operating in the sector; and a focus group. Information is processed with the will for maximum objectivity of the findings. In many cases, the analyzed information applies to sector Manufacture of textiles and textile products as a whole, i.e. the information covers both SMEs and large enterprises, based on the assumption that if a Bulgarian company has been successful on certain markets, the same could be expected for another company as well, incl. from the group of SMEs. These specifics are explicitly emphasized during the analysis. STRUCTURE OF THE EXPORT STRATEGY FOR SECTOR MANUFACTURE OF TEXTILES AND TEXTILE PRODUCTS At determining the structure of the Export strategy for sector Manufacture of textiles and textile products the use of the strategic planning approach has been considered, which sets the general parameters of the strategic document. At the same time, a survey was made of the structure of other institutional strategic documents, using the following evaluation criteria: Is there a possibility for comparably easy acquaintance with the document through a comprehensive and logic structuring of various parts; Is the content represented in an attractive and easy to understand way, accessible for non-professionals; Is it possible to provide the information thematically, i.e. is the material structured in a way to allow in-depth introduction into the issues and analysis only if the reader is willing to. The above mentioned criteria were met by several of the studied strategies and they contained two clearly distinguished separate parts, namely: 1. A main document, in which according to the above described technology of strategic planning the separate chapters are defined. 2. Appendices that contain the complete text of the analyses. This approach was preferred in structuring the Export strategy for sector Manufacture of textiles and textile products. Following consultations with the Assignor, conclusions and findings in the main document were complemented with concrete data and visualized by graphs and schemes, thus increasing the information content of the document. 9

10 2. MAIN CONCLUSIONS OF THE ANALYSIS OF THE CURRENT SITUATION This part contains the summarized conclusions of different analyses, included in the Analysis of the environment, being one of the main steps in the strategic planning technology. The conclusions and the analyses themselves are structured in 6 parts, as follows: State and development of the sector in Bulgaria Export orientation of the sector Goods with export advantages and potential Competitiveness of the export of goods on foreign markets Export priority product groups in the sector and main markets Barriers to the internationalization of SMEs and measures for their overcoming STATE AND DEVELOPMENT OF THE SECTOR IN BULGARIA Generally for sector Manufacture of textiles and textile products Small and medium enterprises prevail in the sector. Similar to national industry total, a trend is observed in the period towards a reduction of the number of enterprises, respectively, of the number of employed in the sector. The dynamics of the manufactured production and turnover of companies in the sector measured by the indexes of industrial production and of turnover, show significant fluctuations in trends in the sector in the period , implying the existence of a serious need in urgent and adequate measures for stabilization and support of the sector Industry total Manufacturing industry Manufacture of textiles and textile products Industry total Manufacturing industry Manufacture of textiles and textile products Index of industrial production ,1 71,7 79,3 92,8 106,5 118, ,6 114,4 96,0 103, Index of the turnover on the domestic market 83,6 87,7 104,7 94,8 114,9 126,7 142,7 168,9 178,1 150,0 161,4 75,7 75,6 82,5 88, ,4 144,0 155,7 157,4 135,6 136, Note: December of the year, 2005=100. Source NSI 10

11 Few companies have introduced internationally recognized standards in their production - 1 company has ISO 9001:2000 certificate, 21 companies maintain ISO 9001:2008, 1 company maintains ISO 14001:2004 certificate and two other - OHSAS 18001:2007 certificate for providing healthy and safe working conditions. The observed distribution of companies and employed by regions in sector Manufacture of textiles and textile products is rather uneven. The biggest concentration of companies is in the South-Western region, followed by the South- Central region and the lowest concentration is in the North-Eastern region. This distribution is connected with to traditions in production. Employed in the sector (prs) % of employed in the region % of employed in the sector % of companies in the sector North-western region North central region North-eastern region South-eastern region South central region South-western region Source: Amadeus database, MEET, Currently the textile industry is represented by about 700 companies, as the salary level in the sector is among the lowest nation-wide. The average monthly salary is estimated at about 460 BGN. The sector provides employment to 12,8 thousand people (2,6 % of the employed in manufacturing). In comparison, as of 2004 the textile industry in Bulgaria involved about 730 companies with 35 thousand employees. The manufacture has traditions in Bulgaria and consists of preparation and spinning of textile fibres, fabrics, yarns, made-up textile articles (except clothing) and others. Companies in the sector are located mainly on the territory of Southern Bulgaria. Staffing of the sector is provided by 54 professional colleges. At the same time, there is a discrepancy between the offered professional education and business demands, as well as a low share of the graduated textile specialists, who find their realization in the sector. The situation of the country is favourable in geographic aspect due to the proximity to raw materials and consumers. However, it should be taken into account that in the last years the local raw materials base is limited due to the reduced production of wool, cotton and fibres. 11

12 SMEs in sector Manufacture of textiles and textile products The sector employs 1.74% of the employed in SMEs, and although its ranking is one of the worst among SMEs in manufacturing in terms of turnover (1.39%) and added value (1.64%) in 2010, it managed to maintain its turnover on the international market. Labour productivity of SMEs in the sector is lower than the average productivity of SMEs in manufacturing, but it increases by faster rates compared to total industry an increase of 33.8% in 2010 compared to the previous year. There is trend for a decrease in the number of enterprises (from 681 SMEs in 2009 to 599 SMEs in 2010) and employees (respectively, from 6965 persons to 6402 persons) in the sector, which is characteristic of all sectors of manufacturing. In inter-sector aspect, the sub-sector Manufacture of other textile products accounts for the highest employment (61,42%), followed by Weaving of textiles. Labour productivity, however, is highest in enterprises from group Finishing of yarns, fabrics and clothing. The analysis of data from the company survey 1 of SMEs turnover in the period does not allow defining a clearly expressed trend in the change of turnover of companies, as during the examined years the number of companies with increased and decreased turnover is equal. In the period , SMEs included in the survey do not use efficiently their resources and revenues, which is obvious from the indexes of profitability of revenues from sales, own capital and assets. As a result of the financial analysis of 12 2 companies in the survey, it is obvious that the group 3 of 2 companies is strongly dependent on external sources of funds, while the group of 10 companies is increasing its financial independence during the studied period, partially due to the difficult access to crediting. EXPORT ORIENTATION OF THE SECTOR Generally for sector Manufacture of textiles and textile products The share of the export of the sector in total exports of the country is 2,02%, thus ranking 9 th among the analized sectors in the manufacturing industry. In dynamics, the reported trend of decrease in the share of exports of the sector following 2007, unlike the observed increase in other sectors, is indicative for the negative consequences of the crises and for the fact that the sector has still not succeeded in overcoming them. 1 The survey is carried out in the period 31 October 28 November 2011 with the top management of 5 micro, 10 small and 4 medium enterprises (total 19 SMEs), operating in sector Manufacture of textile and textile products. 2 The financial analysis includes 12 companies in sector Manufacture of textile and textile products, as of the date of the analysis information from the Trade Registry was available for only 12 of the surveyed 19 companies. 3 Two of the analyzed 12 companies concentrate the main part of assets nearly 50% and realize between 65 and 73% of turnover in the studied period. In order to avoid distortion of the results, the financial state of these two companies is analyzed separately. Two groups are formed the group of 10 and the group of 2 enterprises. 12

13 Динамика Dynamics на of износа the export на сектор of sector "Производство Manufacture на текстил of textiles и изделия and textile от текстил, products, без облекло", , , thous. хил. BGN лв Source: ITC In 2010, sector Manufacture of textiles and textile products recorded an increase in the value of exports of about 10% compared to 2009, as only 3 of the examined sectors registered lower increase (or respectively, decrease). SMEs in sector Manufacture of textiles and textile products The generally observed trend in export volumes in 2010 compared to 2009 is a decrease of the export of SMEs, with an increase in the total export in the sector, showing that small and medium enterprises are more significantly affected by the global financial and economic crisis, in comparison with large companies. In both years of the studied period the share of SMEs in the export of sector Manufacture of textiles and textile products is relatively low 24,3 % in 2009 and 18,1 % in SECTOR SMEs export, 2009, (thousand BGN) SMEs export, 2010 (thousand BGN) Share of the export of SMEs in the total export of the sector, 2009, % Share of the export of SMEs in the total export of the sector, 2010, % Manufacture of textiles and ,27 18,12 textile products, except wearing apparel Source: NSI The share of the export of SMEs in the registered export of the corresponding sector decreased in 2010 compared to 2009 for all examined sectors. The decrease in the share of SMEs in the export of sector Manufacture of textiles and textile products is relatively low 6,16 percentage points. In the frame of SMEs of the sector, the group of Preparation and spinning of textile fibres has the biggest share in the export of textiles, while the highest growth in export volumes is observed in the group Manufacture of other textiles. 13

14 NACE code Groups of enterprises 13 Manufacture of textiles and textile products 13.1 Preparation and spinning of textile fibres 13.2 Manufacture of tissues 13.3 Finishing of yarns, fabrics and clothing 13.9 Manufacture of other textiles Exports (thousand BGN) Exports (thousand BGN) Structure of exports (%) Change of exports 2010/2009 (%) Export volume per 1 employed (BGN) ,0 100,0 79, ,99% 45,57% 84, ,85% ,82% ,34% 30,87% 133, Source: NSI In terms of the indicator volume of the export per 1 employed sector Manufacture of textiles and textile products ranks 11 th among the analysed sectors in 2009 and 12 th in 2010, showing that a big part of the production of SMEs in the sector is directed at the domestic market. The presence of export oriented SMEs in the sector is confirmed by the company survey. It is obvious from data received that 1/3 of the companies export over 60% of their production. Considering the fact that the sample includes only companies, which export or have the intention to export, a conclusion can be made that the number of SMEs with real export activity is quite small compared to the total number. Almost all companies in the sample export directly without intermediation by trade companies, creation of joint trade activity with other companies, etc. GOODS WITH EXPORT ADVANTAGES AND POTENTIAL Generally for sector Manufacture of textiles and textile products The product groups, manufactured and exported in sector Manufacture of textiles and textile products are extremely numerous. Therefore the selection of product groups with export advantages and potential was done on the basis of several criteria, namely: highest relative share in the export of the corresponding product group, increase during the studied period or realized big export volumes before the beginning of the global economic crisis. The analysis includes also the product groups with relatively stable exports during the studied period. These criteria were applied for the sector as a whole, as official statistical information for SMEs is not available. The application of the selected criteria to data of the International Trade Centre gave ground to determine the following 17 product groups, having export advantages and potential: 14

15 CEA Description Yarn of combed wool, not suited for retail sale Wool, fine or coarse animal hair, carded or combed (including combed wool) Woven fabrics of carded wool or carded fine animal hair Yarn of synthetic staple fibres (other than sewing thread) not suited for retail sale - Containing 85% or more staple fibres of nylon or other polyamides Other woven fabrics of synthetic staple fibres Synthetic filament yarn (other than sewing thread) not suited for retail sale, including synthetic monofilament with linear density of less than 67 dtex Sewing thread of synthetic filaments, suited for retail sale Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of Artificial filament yarn (other than sewing thread) not suited for retail sale, including artificial monofilament with linear density of less than 67 dtex Other knitted or crocheted fabrics (earliest data to 2002.) Knitted or crocheted fabrics of width exceeding 30 cm, containing 5% or more of elastomeric yarn or rubber thread, other than those of 6001 (earliest data to 2002) Velvet, pile fabrics (including fabrics, called 'long pile') and terry fabrics, knitted Cotton yarn (other than sewing thread), containing 85% or more cotton, not suited for retail sale Cotton yarn (other than sewing thread) suited for retail Woven fabrics, containing 85% or more cotton by weight exceeding 200 g / m² Woven fabrics, containing less than 85% cotton, mixed mainly or solely with man-made fibres a weight not exceeding 200 g / m², Woven fabrics, containing at least 85% cotton, weighing not more than 200 g / m². Source: International Trade Centre The main findings of the analysis of the ranking of Bulgaria in world exports, the export dynamics, and the position of our country in terms of export volumes of the selected product groups in the sector are summarized in the table below: Description Rnk in world exports in 2001 Rank in world exports in Share in world exports in 2010 Share in the export of the leading world exporter in 2010 to 2001 Yarn of combed wool, not suited ,76% 1,04% 9,12% for retail sale Wool, fine or coarse animal hair, ,37% 0,43 0,96% carded or combed (including combed wool) Woven fabrics of carded wool or ,03% 0,98 2,48% Share in the export of the leading world exporter in 2010

16 Description carded fine animal hair Yarn of synthetic staple fibres (other than sewing thread) not suited for retail sale - Containing 85% or more staple fibres of nylon or other polyamides Other woven fabrics of synthetic staple fibres Synthetic filament yarn (other than sewing thread) not suited for retail sale, including synthetic monofilament with linear density of less than 67 dtex Sewing thread of synthetic filaments, suited for retail sale Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of 5404 Artificial filament yarn (other than sewing thread) not suited for retail sale, including artificial monofilament with linear density of less than 67 dtex Other knitted or crocheted fabrics (earliest data to 2002.) Knitted or crocheted fabrics of width exceeding 30 cm, containing 5% or more of elastomeric yarn or rubber thread, other than those of 6001 (earliest data to 2002) Velvet, pile fabrics (including fabrics, called 'long pile') and terry fabrics, knitted Cotton yarn (other than sewing thread), containing 85% or more cotton, not suited for retail sale Cotton yarn (other than sewing thread) suited for retail Woven fabrics, containing 85% or more cotton by weight exceeding 200 g / m² Woven fabrics, containing less than 85% cotton, mixed mainly or solely with man-made fibres a weight not exceeding 200 g / m², Woven fabrics, containing at least 85% cotton, weighing not more than 200 g / m². Rnk in world exports in 2001 Rank in world exports in Share in world exports in 2010 Share in the export of the leading world exporter in 2010 to ,23% 1,13 6,26% ,48% 2,87 1,44% ,19% 0,23% 1,16% ,21% 0,58% 0,85% ,03% 0,26% 0,08% ,89% 11,21% 2,05% ,14% 0,35% 0,37% ,08% 0,74% 0,30% ,12% 0,20% 0,24% ,04% 0,58% 0,19% ,51% 12,81% 8,52% ,05% 1,13% 0,18% ,09% 1,46 0, ,04% 0,45 0,08 Source: ITC Share in the export of the leading world exporter in 2010 The presented data show that in 2010 the best ranking among world exporters has the product group Yarn of combed wool, not suited for retail sale. Three of the product

17 groups Yarn of combed wool, not suited for retail sale, Cotton yarn (other than sewing thread), suited for retail, and Yarn of synthetic staple fibres (other than sewing thread), not suited for retail sale containing 85% or more staple fibres of nylon or other polyamides - hold leading positions in the share of Bulgaria in world exports (respectively, 2,76%, 1,51% and 1,23%). Most of these product groups have export advantages due to the fact that they rely on local raw material, which are traditional for Bulgaria. The smallest share in world exports is recorded by product group Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of 5404 (0,03%); Exports increase in 11 of the analyzed product groups. The groups without growth in exports are more affected by the economic crisis. SMEs in sector Manufacture of textiles and textile products The above presented data for the analyzed product groups refer to all companies in the sector and not only to SMEs. The lack of sufficient statistical information does not allow identifying the share of the export of SMEs in the export of analyzed product groups. Certain orientation is provided by the results of the company survey. Companies in the sample declare that in 2010 they exported mainly pillows, long fur articles, luxury packaging, synthetic filament and staple fibre yarn, including wool yarn, household linen, tapestry schemes, textile labels, terry fabrics and wrappers, car seats. According to 89,5% of interviewed managers, the companies have sufficient production capacity for manufacturing of export goods. 100% of the companies declare that their management teams have the unified will for export realization. According to the respondents, therefore, in terms of capacity and managerial attitude of company top managements, there are no obstacles for the realization of successful export activity. The companies have limited experience in organizing participations in national and international exhibitions and do not dispose of enough experts with foreign trade experience. In this sense, the managers who participated in the survey do not pay due attention to research and development activities as a precondition of the successful realization on foreign markets. To a much bigger extent, high qualification of the personnel and high technology level are the main factors, influencing the export. Due to the profile of the surveyed companies, they export finished products with more specific qualities (according the offered classification raw materials, semimanufactured goods and finished products) with high or average level of processing. At the same time, more than one-half of respondents share the opinion that there are no goods and services with distinctly higher share of added value in the sector, to contribute to export growth. Thus, notwithstanding the generally high degree of product processing, according to the responding managers the added value in the productions of sector Manufacture of textiles and textile products is small. 17

18 COMPETITIVENESS OF THE EXPORT OF GOODS ON FOREIGN MARKETS Generally for sector Manufacture of textiles and textile products The export markets of sector Manufacture of textiles and textile products are almost entirely concentrated in Europe, indicating a strong dependence on the European markets economy. The main markets of the analyzed product groups in sector Manufacture of textiles and textile products are presented below and they are determined on the basis of data on the Bulgarian export for each product group. All quantity data are contained in Annex 4 Competitiveness of the Bulgarian textile on foreign markets to the present strategy, section Determination and prioritizing of target markets. Wool, fine or coarse hair - The product groups with the highest export are as follows: - Yarn of combed wool, not suited for retail sale: - Main markets for the Bulgarian export are Italy, UK, Romania, and Hungary. - The product with highest share is: yarn of combed wool, containing >=85% wool, unbleached (excl. those not suited for retail trade). - The Italian market is highly competitive for the studied product group big volumes of both import and export. A positive fact for the Bulgarian export to Italy is that after 2006 the trade balance of the country is negative. - Wool, fine or coarse animal hair, carded or combed: - Main markets for the Bulgarian export are Italy, Turkey and Germany. - The product with highest share is: combed wool (fine animal hair, carded or combed). - The Italian market depends on imported Wool, fine or coarse animal hair, carded or combed. A positive fact for the Bulgarian export to Italy is that after 2006 the trade balance of the country is negative. - Woven fabrics of carded wool or carded fine animal hair: - Main markets for the Bulgarian export are Italy, France and UK. - The product with highest share is: fabrics, containing <85% wool, carded wool or carded fine animal hair, combined mainly or only with staple synthetic or artificial filament weighting > 300 g, but <=450 g/m ². - The Italian market in general does not rely on imported woven fabrics of carded wool or carded fine animal hair for satisfying its demand. However, the slight increase in the export value in the last analyzed year is positive for the Bulgarian export. - Main competitors on the Italian market are China, the Czech Republic, Germany, Austria, UK, Poland, and Bulgaria ranks 7 th by volume among the importers on the biggest European market. 18

19 Cotton - The product groups with the highest export are: - Cotton yarn (other than sewing thread), containing 85% or more cotton, not suited for retail sale: - Main markets for the Bulgarian export are Italy, Turkey, Serbia and Macedonia. - The main exported products are: - woven fabrics, containing 85% or more cotton by weight, cotton with linear density of 125 dtex, but <192,31 dtex (with metric number exceeding 52, but not exceeding 80 (excluding sewing threads and yarn, not suitable for retail trade). - woven fabrics, containing 85% or more cotton by weight, cotton with linear density of dtex, but < dtex (with metric number exceeding 14, but not exceeding 43 (excluding sewing threads and yarn, not suitable for retail trade) - woven fabrics, containing 85% or more cotton by weight, cotton with linear density of dtex, but < dtex (with metric number exceeding 43, but not exceeding 52 (excluding sewing threads and yarn, not suitable for retail trade). - The registered increase in the total import in 2010 makes the Italian market a priority for the Bulgarian exporters. In this sense, it is important to make efforts to prevent the imports of Bulgarian products in Italy from further decline. The markets of Turkey and Serbia, where an upward trend in Bulgarian imports is observed, make an alternative for Bulgarian exporters. - Cotton yarn (other than sewing threads), suited for retail: - Main markets for the Bulgarian export are Germany and France. - The mainly exported product is cotton yarn, containing 85% cotton, suited for retail (other than sewing threads). - The negative trade balance is revealing the dependence of the German market on imported Cotton yarn (other than sewing threads), suited for retail. The growth of the Bulgarian import on the German market in 2010 is a positive fact for the Bulgarian exporters. - Cotton yarn, containing 85% or more cotton, with weight, exceeding 200 g/m: - The main market for the Bulgarian export is Italy. - The main exported products are: cotton fabrics, containing >=85% cotton, weighting > 200 G/M², dyed (other than those with twill weave with repeat, exceeding 4 and usual fabrics) and cotton fabrics, containing>=85% cotton, weighting > 200 G/M², non bleached (other than those with twill weave with repeat, not exceeding 4 and usual fabrics). 19

20 - The export of this product group from Italy is bigger than import, yet the latter is substantial. In this sense, it is important to make efforts and prevent further losses of our positions on the studied market. - Cotton yarn, containing less than 85% cotton, combined mainly or only with synthetic or artificial filaments, with weight, not exceeding 200 g/m²: - Main markets for the Bulgarian export are Italy and Serbia. - The main exported product is: cotton fabrics, containing < 85% cotton, combined mainly with syntactical or artificial fabrics, weighting <=200 G/M², from different colours yarns (other than those with twill weave with repeat, not exceeding 4). - On the Italian market there is an increase of import after the drop registered in However, the Bulgarian import in 2010 remains extremely low. - Cotton yarn, containing at least 85%, with weight, not exceeding 200 g/m: - Main markets for the Bulgarian export are Italy and Romania. - The main exported product is: cotton fabrics, containing >= 85% cotton, weighting >130 G to 200 G/M ², printed with linen weave. - The Italian market of the studied group is highly competitive large volumes of both imports and exports. The decreasing trade balance values make it a priority for the Bulgarian manufacturers. In this sense, it is important to make efforts and prevent further decrease of the share of Bulgarian exports in the total import of Italy. - Our main competitors on the Italian market are China, Turkey, India, Pakistan, Egypt, and on the German market these are Italy, Turkey, Pakistan, India and Switzerland. Synthetic or artificial filaments - The product groups with the highest export are: - Synthetic filament yarn (other than sewing thread) not suited for retail sale, including synthetic monofilament with linear density of less than 67 dtex: - Main markets for the Bulgarian export are Italy, Germany and Turkey. - The main exported product is textured yarn with polyester filament (other than not suited for retail trade). - Notwithstanding the positive trade balance of Italy in this product group, imports in the country are substantial. The upward trend of the Bulgarian import in the recent years proves the significance of Italy as an important export destination for the Bulgarian production. - Sewing thread of synthetic or artificial filament yarn (other than sewing thread) not suited for retail sale: - Main markets for the Bulgarian export are Macedonia and Greece. - The main exported product is sewing thread of synthetic filament, suited for retail trade. 20

21 - The negative trade balance of Macedonia in sewing thread of synthetic or artificial filament, even suited for retail trade, along with the registered increase in the Bulgarian import, make Macedonia an important export destination for this product group for Bulgaria. - Yarn of synthetic filament yarn: - Main markets for the Bulgarian export are Italy, Romania and UK. - The main exported products are: high solidity yarn filaments, of nylon or other polyamides, including monofilament with linear density >=67 dtex, whose largest cross-sectional dimension <=1 mm, containing >=85% or more staple fibres of nylon or other polyamides. - It is a positive fact for the Bulgarian export to Italy that the trade balance of the country gradually decreases and the import reaches its pre-crisis values. At the same time, it is necessary to consider the decrease in the value of the Bulgarian import in Italy, as well as the emerging possibilities for the Bulgarian exporters on the Croatian market, due to the fact that our exports to Croatia in are negligible in value, but they increased significantly in The reasons for that lie in the proximity between Bulgarian and Croatia, as well as the establishment of new business contacts and conquering market niche on the Croatian market. - Artificial filament yarn (other than sewing thread) not suited for retail sale - Main markets for the Bulgarian export are Italy, Germany and Turkey. - The main exported product is: viscose silk filament yarn, including monofilament with linear density <67 decitex, singular, without twist or with twist <120 per meter (excluding sewing threads, yarn, suited for retail trade, highly solid yarns and textured yarns). - Regardless of the negative trade balance on the Italian market, it is worth mentioning the downward trend in Bulgarian imports in the country. In this sense, it is necessary to make efforts to strengthen the Bulgarian positions in Italy, as well as to develop the potential of markets like Turkey and Germany, where an increase was recorded in Our main competitors on the Italian market are Germany, China, the Netherlands, Spain and France. Synthetic or artificial staple filament - The product groups with the highest export are: - Synthetic staple filament yarns (other than sewing threads), not suited for retail trade containing 85% or more staple filaments of nylon or other polyamides: - Main markets for the Bulgarian export are Italy, Poland and Turkey. - The main exported product is yarn, containing basic but <85% acrylic or modacrylic staple filaments, combined mainly or only with wool or fine animal hair (excluding sewing threads and wool, suited for retail trade). - The registered increase in the import of Italy of the analysed product group in the last year up to values, outrunning the pre-crisis levels, is a positive sign for the Bulgarian exporters. It is necessary, however, to consider the 21

22 negative trend in the volumes of Bulgarian imports on the Italian market and make efforts for strengthening our positions there. - Other fabrics of synthetic staple filaments: - Main markets for the Bulgarian export are Germany, France and Italy. - The main exported product in Germany and France are fabrics, containing mainly, but <85% polyester staple filaments, combined mainly and only with carded wool or fine animal hair, coated, made of yarn in different colours and stamped. - The trade balance of Germany is positive, although the import of the country is significant (nearly 82% of the export in 2010). This, along with the observed increase in the value of Bulgarian imports in 2010, makes the German market a perspective destination for the Bulgarian exporters. - The French import of the examined product group is large, but a declining trend is recently observed. This is an indicator that should be considered, moreover, in combination with the decreasing Bulgarian imports after Our main competitors on the Italian market are China, Germany, Turkey, Belgium and Romania. Knitted or crocheted fabrics - The product groups with the biggest export are: - Other knitted fabrics: - Main markets for the Bulgarian export are Italy, Greece and Austria. - The main exported product is non-bleached or bleached fabrics, knitted or crocheted, made of synthetic filaments, with >30 cm (excluding curtains, mainly crocheted fabrics, including those, made by galloon crocheting machines, those, including >=5 elastomer yarn. - A positive fact for the Bulgarian export to Italy is that the trade balance of the country gradually decreases, due to the increase in import values. Imports of this product from Bulgaria record a decrease after the peak in Knitted or crocheted fabrics of width exceeding 30 cm, containing 5% or more of elastomeric yarn or rubber thread, other than those of 6001: - Main markets for the Bulgarian export are Italy, Greece and Romania. - The main exported product is knitted or crocheted fabrics, of width exceeding 30 cm, containing >=5% elastomer yarn (excluding rubber filaments, plush (including fabrics, called with long pile ), terry fabrics, labels, badges and similar articles, knitted or crocheted). - Notwithstanding the increasing import of this product group in Italy, the Bulgarian export there is drastically decreasing, especially in For this product group, a recovery of the pre-crisss import values is observed only on the Romanian market. - Velvet, pile (including fabrics, called 'long pile') and terry fabrics, knitted : - Main markets for the Bulgarian export are the Netherlands and Greece. 22