Export-quality manufacturing in Kyrgyzstan

10 January 2014
ITC News
Growth of 15% in the Kyrgyz clothing sector during the first 11 months of 2011 — double the previous year’s rate — was welcome news to a government battling a record trade deficit. Exports by clothing companies jumped by US$ 20 million between January and November, and this was in part, according to Kyrgyz officials, the result of ITC’s trade-promotion work in the sector.

While there are no published statistics yet, anecdotal evidence shows that ITC-supported companies have added staff and increased wages. Both have been made possible by new sales contracts, as well as quality and productivity improvements at the companies.

“The task of bringing the food processing and clothing sectors up to international standards, and thus becoming an impulse for positive economic development of the Kyrgyz Republic, is tremendous,” said Deputy Economy Minister Oleg Pankratov. “It has been a practical and successful programme in sectors with substantial problems.”

Building quality management into business

Primavera, a clothing maker in the capital Bishkek, has increased its revenues by 30% and its headcount by 20% this year, according to owner Olga Kim. Thanks to the introduction of an ITC-supported quality-management programme, which awards seamstresses bonuses based on quality, many of Primavera’s 70 workers have seen their pay increase by one-fourth since the beginning of the year. Participation in training courses has increased their output, while reducing the number of defects.

“We only started tracking defects thanks to the ITC programme,” Kim said. “What you cannot measure, you cannot improve.”

Across town at Lilastyle, finding new buyers and moving up the value chain have been key benefits of the ITC training. The company, which manufactures girls’ prom dresses for the Russian market, has doubled the unit sales price of its products over the past two years, according to owner Tatiana Pavelnko. Through ITC, she and her colleagues have learned how to get the most out of industry fairs and how to present their products to potential buyers.

Pavelnko, who dusted off her grandmother’s sewing machine in the late 1990s to make her first blouse, now employs 50 people. She had vague ideas about quality management, but the ITC project gave her the tools to implement them. “We knew what to do, but we did not know how,” she said.

Potential for growth

The textiles and clothing sector in Kyrgyzstan represents 7% of the country’s total industrial output and employs around 120,000 people, 70% of them women. It was identified by the government as an industry for trade promotion because of its high potential for exports to offset the country’s growing trade deficit.

In 2008, the government approached ITC to implement a trade promotion project focusing on the sector, with a budget of US$ 1.84 million over three years, financed by Switzerland.

Damira Aitykeeva, who heads the Garments Design Department at the Kyrgyz State University of Construction, Transportation and Architecture, took part in the ITC project as a national consultant on productivity and production. She incorporated many of the ideas she learned from ITC consultants into the university curriculum. “What this industry is lacking are competent middle managers,” she said. “Modernizing the curriculum and making students focus more on their future clients will address this issue, going forward.”

Previously, none of the 15 companies Aitykeeva works with had any organized quality control in place. They did not even measure their defects, she said. Productivity was low as a result, and the quality level was suitable only for the low end of the export market. “Many of these companies were founded by people who are not from the industry, but traders, or even teachers and lawyers,” she said. As part of her work at the university, Aitykeeva follows up with the beneficiary companies, and she has added two more companies as clients.

Back at Lilastyle, Pavelnko has big plans for the next few years. She is planning to move the company from its current location at her former family house to an industrial site with three times the floor space. In the volatile economic climate, however, she is treading carefully. If all goes well and sales continue to increase, she will be able to complete construction of the 750 square metre plant in two years.

ITC Makes a Lasting Impression

At the northeastern end of Bishkek, a 20-minute ride from the town centre through potholed roads, 23-year-old Bakhtiyar Kudakeldiev works as a water-bottling operator. He doesn’t know it, but he’s a beneficiary of an ITC quality-management programme. Bakhtiyar works for Shoro, Kyrgyzstan’s largest beverage company. Bakhtiyar, who has worked at the plant since moving to Bishkek from a small village in 2007, has enjoyed a warmer and cleaner workplace and a monthly bonus ranging from 5% to a whopping 100% of his salary since the enhanced process was introduced.

Between 2006 and 2008, ITC implemented a US$ 1 million project to improve the export capacities of six companies in Kyrgyzstan’s fruit and vegetable sector. As part of the project, ITC trained 25 national consultants, one of whom was Giulnara Jujsupjanova, who has been advising companies on quality management and productivity improvement ever since. Shoro is now her largest client, and a perfect example of how ITC programmes make a lasting impression.

Jujsupjanova and Shoro’s quality director are retrofitting the entire production system: plugging holes in the walls to keep insects outside and heat inside, to meet SPS requirements. They have also replaced corroding doors and windows, introduced compulsory uniforms and hair coverings, and installed personal lockers in changing rooms as part of the process towards ISO 9001 certification. To earn their bonuses, Bakhtiyar and his teammates must perform simple quality checks to make sure the water bottles are well closed, contain the right amount of water and have well glued stickers. Their pay climbs as the number of defects falls and productivity improves.

The US$ 1 million upgrade and the ISO certification will better position Shoro to take on both local competition and imported mineral water. It is also a prerequisite to expansion into foreign markets, primarily Kazakhstan and the Russian Federation.

Could this have been accomplished without ITC’s involvement? “There is no way,” Jujsupjanova said. “ITC provided me with a comprehensive understanding of quality management, one that goes beyond individual certifications and allows Shoro to make both general quality-management and food-safety improvements.”