ITC Impact: Kyrgyzstan – boosting quality and exports

27 January 2015
ITC News
ITC’s capacity building programmes help assist SMEs to increase exports of textile and clothing

ITC’s capacity-building programmes in Kyrgyzstan over the past decade have assisted small and medium-sized enterprises to increase exports, particularly of textiles and clothing.

‘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 Danil Ibraev of the ITC support. ‘It has been a practical and successful programme in sectors with substantial problems.’

Nazik, a clothing enterprise in Bishkek, increased revenues by 30% and personnel by 20% in 2013, after the introduction of an ITC-supported quality-management programme. The programme awards seamstresses bonuses if they meet certain quality benchmarks. As a result, many of Nazik’s 100 personnel have seen their pay increase by 15%, according to owner Zamira Myrzakanova. Training courses have helped increase output and reduce the number of defects.

‘We only started tracking defects thanks to the ITC programme,’ Myrzakanova said.
‘What you cannot measure, you cannot improve.’

Across town at Lilastyle, which manufactures girls’ prom dresses for the Russian market, finding new buyers and improving quality have been the key benefits of ITC’s support.

Through ITC, Lilastyle owner Tatiana Pavelnko and her colleagues have learned how to benefit from industry fairs and market 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.

Pavelnko has big plans for the next few years. She is planning to move the company from its current location at her former family home to an industrial site with three times the floor space. However, in today’s volatile economic environment, 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 the near future.

High potential for textiles and clothing

The textiles and clothing sector in Kyrgyzstan represents 7% of the country’s total industrial output and employs around 150,000 people, 70% of whom are women. The government identified the sector as an industry for trade promotion because of its high export potential, which could help offset the country’s growing trade deficit.

In 2008, ITC designed a trade promotion project with a budget of US$1.8 million over three years, financed by Switzerland. Exports at supported enterprises grew by an average of 48%.
Based on this success, a new phase of the project was launched in 2013, with a budget of US $2.5 million, to be implemented through 2016. Managers and staff from over 130 companies have benefitted from assistance so far, almost three-quarters of them women. Close to 50 companies have received assistance in sourcing, product development, productivity, design and marketing over the last two years. New skills acquired in the classification, selection and testing of fabrics, as well as on negotiating with Asian suppliers (mostly from China and Viet Nam), have led to savings of over US$250,000, said Indira Kadyrkanova, ITC’s Project Manager based in Kyrgyzstan.

Weathering the economic storm in Russia

The supported companies weathered a downturn in Russian demand better than their competitors, figures show. Slower economic growth, tighter government spending and changes in Russian consumer spending patterns in anticipation of an economic slowdown have caused Kyrgyzstan’s overall clothing exports to decline by a third. Companies ITC works with, in contrast, have registered a sales decrease of only 15%.

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 into the university curriculum. ‘This industry lacks 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 30 companies Aitykeeva worked with had implemented organized quality control. For example, they did not measure their defects, she said. Productivity was low as a result, and product quality 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 ITCsupported companies and has 15 additional clients.

For 2015, the ITC team will focus on training activities and seminars on promotion and sales, including e-commerce, online promotion and social networks, Kadyrkanova said.
‘This will allow our beneficiaries to identify buyers further afield,’ she explained.