Supporting international sourcing and sales for Tunisia’s textiles and clothing sector

10 julio 2017
ITC News
The challenge

The textile and clothing sector is Tunisia’s main source of manufacturing export revenue and value addition. The sector employs about 200,000 people, three-quarters of them women, mostly in small and medium-sized enterprises (SMEs). It offers considerable potential for further growth and job creation.

Yet Tunisian textile and clothing exporters often struggle to harness their full potential in international markets. Longstanding competition from China, Viet Nam and Bangladesh has been exacerbated by the entry of new market actors in places like Egypt, Turkey, Morocco and Sri Lanka. To the extent that Tunisian SMEs are part of international supply networks in the sector, it is mainly as sub-contractors to big companies at the lowest-value parts of the production chain. They struggle to differentiate their products in the highly competitive international market, held back by weak capacities in styling, modelling and the preparation of collections. Their supplier base is small, constraining their already limited ability to respond to buyers’ fast-changing expectations and demands.

The response

ITC is working with the Tunisian government, sector institutions such as the Fédération Nationale du Textile (FENATEX), the Centre de Promotion des Exportations (CEPEX) and 37 companies in the country’s textile and clothing sector to increase export earnings and create new job opportunities for young people.

The Projet d’Appui à la Compétitivité de la chaîne de valeur du secteur Textile et Habillement (textile and clothing value chain competitiveness project, or COM-TEXHA) operates on multiple fronts. It provides training on input sourcing management and facilitates links with new potential suppliers to enable SMEs to diversify their supply base and ramp up export capacity. It fosters partnerships between companies from the country’s more internationally integrated coastal areas and those from the relatively isolated interior to help them expand value chains and generate jobs in those areas. By creating a pool of young workers specialized in product development, the project meets companies’ needs for cutting-edge design and production management.

Finally, the project works to connect Tunisian companies to potential international clients through business matchmaking events in selected markets such as Egypt, the United Arab Emirates, Denmark, Spain and Sweden.

The results

Companies involved with the project have successfully diversified their supplier bases, upgraded product quality and made inroads in international markets while spurring follow-on cross-border business activity independent of the ITC project. A 2016 trade mission to Egypt saw five of the companies strike deals with Egyptian suppliers.

‘This mission was a discovery for us. We were too much focused on our day-to-day lives, we didn’t see further than the tip of our nose but this mission opened our eyes,’ said Safouene Chebbi, owner of Sarra Creation, a Sfax-based producer of ready-to-wear clothes, after signing an agreement to source inputs from an Egyptian supplier at rates lower than what his company used to pay.

To reduce the transaction costs associated with sourcing, four competing makers of lingerie and bathing suits – Bacovet International, Enfavet International, Isalys and Mahdco Tunisie – joined forces to create a purchasing consortium. The country’s first such group, the alliance will lower unit costs through bulk purchases and let them share the burden of participating in trade fairs and identifying new suppliers.

Meeting the Tunisian companies prompted eight Egyptian suppliers of textiles, yarn, accessories and other inputs to open a new office in Tunisia to pursue new contracts.

Training on fashion trends and collection development has helped 17 companies develop higher quality and more attractive products. Four are set to be in the spotlight as up-and-coming lingerie manufacturers at a top international trade fair in France in 2017.

Companies associated with the project in 2016 hired 11 of the young graduates of Tunisia’s Institut supérieur des métiers de la mode de Monastir trained by ITC in market trends.

Since it started working with ITC in 2015, Sarra Creation, which began in 2002 as a subcontractor to a better-known Tunisian brand, has developed its own brand, Bellino, and opened two new boutiques in the cities of Sfax and Sousse.

ITC, in collaboration with CEPEX, facilitated business matchmaking events in September in Denmark and Sweden where 25 Tunisian companies met with 29 potential Nordic clients. ITC is working to ensure that these preliminary talks are converted into sales contracts.

The future

An independent evaluation conducted in 2016 found that the project had been effective and efficient in delivering assistance to SMEs in Tunisia’s textile and clothing sector. Based on the evaluators’ recommendations, ITC will continue to support the companies’ efforts to internationalize.

The project will also work to broker new partnerships between inland SMEs and larger companies based in greater Tunis and the Sahel region in the country’s south. The country’s logistics companies may require assistance to improve their capacity for direct delivery to foreign clients.

ITC will continue to support the Tunisian government in improving the business environment for SMEs with an emphasis on identifying and lowering obstacles to trade. ITC will also continue working with the trade and investment support institutions in the textile and clothing sector to equip them to better serve SME clients seeking to connect to international markets.