Textile Industry in Serbia

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Competitive Manufacturing & Tradition

SERBIA

TEXTILEINDUSTRY


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CONTENT

ABOUT SERBIA

TRADE UNLIMITED

FAVORABLE TAX SYSTEM

TEXTILE INDUSTRY IN SERBIA

GEOGRAPHICAL DIVISION OF TEXTILE AND GARMENT PRODUCTION IN SERBIA

KEY STRENGHTS

CLOTHING AND TEXTILE INDUSTRY FDI

SIEPA

02

06

07

08

16

22

28

31

Competitive Manufacturing & Tradition


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Serbia is located in the centralpart of the Balkan Peninsula,occupying an area of 88,407 square

kilometers. The length of Serbia’sborder is 2,364.40 kilometers (landborder 1,570 km, river border751.1 km and lake border 43.3km) which it shares with Bulgariato the east, Romania to thenortheast, Hungary to the north,Croatia and Bosnia-Herzegovinato the west, Montenegro tothe southwest and Albania and

Macedonia to the south.Serbia is positioned on the mostimportant route linking Europeand Asia and is often referredto as the cross-roads of Europe.International roads and railwayspassing down along its river valleys

make up the shortest link bet weenwestern and central Europe onone side, and the Middle East, Asiaand Africa on the other. CorridorNo. 10 is the shortest land route(highway) connecting western,central and eastern Europe withGreece, Turkey and the near eastcountries. It runs the full length ofSerbia separating into two routesnear the city of Nis - one routetowards Thessaloniki while theother leads to Sofia and Istanbul.Serbia’s rivers belong to the basins ofthe Black, Adriatic and Aegean Seaswhere the Danube (water corridorVII) is a natural connection between

the Middle East, central Europe andthe developed countries of westernEurope. The country is also linked tothe Adriatic Sea and Montenegrovia the Belgrade-Bar railway.

EU accession is one of the toppriorities of the Serbian Government.After the European Commission

recommended Serbia to receiveEU candidate status in October2011, Serbia officially became an EUmembership candidate on March1st, 2012 and in late June 2013, EUleaders decided accession talks withSerbia should begin by January2014. Based on the National Programfor EU Integration, the country’s

regulatory framework is wellunderway to be fully harmonizedwith Acquis Communautaire.Regardless, once negotiation talkscommence, it would take severalyears to fully adjust the system toEU regulations.

Over the past several years, the Serbianeconomy has experienced growthdue to strong foreign investmentand continuous improvement of itsbusiness environment, even duringthe crisis and recession of 2009. In2011, the economy grew by 1.6%(Source: National Bank of Serbia,www.nbs.rs) and Serbia was theleader in CEE in attracting FDI with€2.2 billion of inbound investments.

This growth was interru pted in 2012as a result of the recession in the Euroarea, Serbia’s main export partner,however, success in attracting FDIcontinued according to the Ernst& Young’s attractiveness survey for2013 (Source: www.ey.com) andSerbia was one of the countries withthe greatest capacity to attract large job-intensive projects, b oth in ter msof number of projects and number of jobs created. The country attracted78 projects in 2012, up by 16.4%year-on-year, creating 10,302 jobs,

which placed Serbia in sixth place inEurope in FDI job creation. Serbianprojects were among the mostlabor intensive in Europe, creatingon average 132 per project. Nearly90% of projects in Serbia came fromEuropean companies. Italian firmsprovided more than half of the new jobs, with German and Austriancompanies also proving to be big

investors, mostly in manufacturing ofautomotive components, machineryand equipment as some of theleading divisions.It is estimated that increased netexports will further boost grossdomestic product in the following

years, largely due to the impendingrealization of agreed investments,notably in the automotive industry.

The World Bank estimates thatSerbia’s economic growth in 2013will exceed 2%.Furthermore, even though publicrevenues declined, taxes did notincrease until 2012 and real wages andcontributions related to salaries werereduced. Specific actions were takento strengthen fiscal responsibility andimprove transparency of policies andadministration. This remains a keypriority for the future. Major reformsin the pension and social systemare on the Government’s agenda,

whose aim is to increase incentivesfor employers and decrease taxationon wages. In 2013, the Governmentreduced the sales tax rate to 10% tofurther relieve businesses.

ABOUTSERBIA

1A PERFECT PLACEFOR ALL TYPES OFMANUFACTURING

3FASTFORWARD

2ON THE EUPATHWAY


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RSD 88.123

22.4 %8

Unemploymentrate 2012Trade

RSD 113.132

€ 4,133.75

12.2%7

1€1$

GDP pc2012

Annualized inflationrate (2012)

Serbian

€ 29,933 million4

-1.7 %6

GDP2012

Real GDP growth2012

7,186, 8621

(excluding Kosovo-Metohija)

Central European Time zone (GMT + 1)

temperature is continental, with a gradual transitionbetween the four seasons of the year

Major Cities: Belgrade: 1.6 million;Novi Sad: 0.34 million; Nis: 0.26 million

88,361 km2

1h

2h

3h

BELGRADE

Exports (2012): 8.8 billion EUR

Imports (2012): 14.8 billion EUR9

Main export products Cereals and cereal products, electrical machinesand appliances, non-ferrous metals, road vehicles,fruits and vegetables. These five fields account for30.7% of overall exports.

Main import products:oil and oil derivatives, natural gas, road vehicles,electrical machines and appliances, medical andpharmaceutical products. These fields togetheraccount for 29.8% of overall imports.

Major export partners (listed by value in exports) are: Germany (€1.0 billion, 11.6% of total exports), Italy(€933.2 million, 10.6% of total exports), Bosnia andHerzegovina (€842.6 million, 9.5% of total exports),Romania (€727.6 million, 8.2% of total exports) andthe Russian Federation (€675.8 million, 7.6% of totalexports). On the import side, top five major partners

are: the Russian Federation (€1.6 billion, 10.9% oftotal imports), Germany (€1.6 billion, 10.9% of totalimports), Italy (€1.4 billion, 9.7% of total imports),China (€1.1 billion, 7.3% of total imports), Hungary(€728.2 million, 4.9% of total imports)

1 Statistical Office of the Republic of Serbia, Census of 20112 National Bank of Serbia3 National Bank of Serbia4 Ministry of Finance and Economy5 Ministry of Finance and Economy6 National Bank of Serbia7 National Bank of Serbia8 Ministry of Finance and Economy9 Serbia Investment and Export Promotion Agency (SIEPA)


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TRADEUNLIMITED ITED

FAVORABLETAX SYSTEM

The free trade of textile produc ts toEU was instituted in 2005.Although Serbia has exported freelyinto the EU since 2001 under gra ntedtrade preferences, free trade wasfurther instituted by the signing ofthe Stabilisation and AssociationAgreement with the EU in 2008. Asa result of the Agreement, Serbiahas also been gradually eliminatingimport customs duties for industrialand certain agricultural products fromEU countries. All these duties will becompletely removed by 2014.Outside the Commonwealth ofIndependent States, Serbia is theonly country with a Free TradeAgreement with Russia. Serbia hasalso signed free trade agreementswith Belarus and Turkey.In 2006, Serbia signed the first

exclusive Agreement on free trade insouth-eastern Europe. CEFTA memberstates include Albania, Bosnia andHerzegovina, Macedonia, Moldova,Montenegro, Serbia and Kosovo.Free Trade Agreement with membercountries of the European Free TradeAssociation (Iceland, Lichtenstein,Norway and Switzerland) was signedin December 2009.Moreover, the duty-free exportregime with the United States appliesto approximately 4,650 products,including mostly finished and semi-finished goods and select agriculturaland primary industrial products.In April 2011, the Euro-Mediterranean convention onpreferential rules of origin wasadopted by the Council of theEuropean Union. The contracting

parties to the Convention were theEU, the Faroe Islands, EFTA states(Iceland, Lichtenstein, Norway andSwitzerland), the participants of TheBarcelona Process (Algeria, Egypt,Israel, Jordan, Lebanon, Morocco,PLO, Syria, Tunisia and Turkey) andparticipants of the EU Stabilizationand Association Process (Albania,Bosnia and Herzegovina, Croatia,Macedonia, Montenegro, Serbiaand Kosovo).WTO compliance negotiations are inthe final stage. Serbia is working hardto resolve technical details with a fewcountries (Brazil, Panama, Ukraine andthe United States) and expects to jointhe WTO soon.Existing FTAs all encompass textileproducts, enabling efficient access tovarious markets.

The corporate profit tax, which ispaid at a uniform rate of 15%, is oneof the lowest in Europe, while the VATis among the most competitive incentral and eastern Europe. The taxbase is the taxable profit shown in thetax balance sheet.Capital gains are recognized for thepurpose of corporate income taxassessment and are generated by thesale or transfer of real-estate, rightsrelated to industrial property, aswell as shares, stocks, securities, andspecific bonds.Withholding tax is calculated and paidat a rate of 20% on various forms of

income (dividends, shares in profits,royalties, interest income, capitalgains, lease payments for real-estate,and other assets) by non-residents. To avoid unnecessary tax burdens,Serbia has double taxation treatieswith more than 40 countries. To encourage new investments,the Government also provides arange of tax breaks, exemptionsand reductions of up to 40% of theinvestment amount in fixed assets.Serbia has one of the most price-competitive industries in Europewith a respectable tradition and vastsupply of skilled workforce.

SERBIA IS A MANUFACTURING HUB WHICH ENABLES DUTYFREE EXPORTS TOMARKETS WITH A TOTAL OF ALMOST A BILLION PEOPLE

SERBIA’S TAX REGIME IS HIGHLY BENEFICIAL FOR DOING BUSINESS.


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Textile and garment production has along history and admirable traditionof fruitful collaboration with foreignpartners. Before the disintegrationof Yugoslavia, textiles were one ofthe leading exports, with annualindustry export revenues of aroundUS$1 billion. Over 70% of the exportrevenues originated from the westernEuropean market. The majority ofthese textile companies were locatedon the territory of Serbia.During the eighties of the last century,Serbian companies produced

garments for a wide range of USand western European companies.Production was mostly conducted ona cut-make-trim (CMT) basis; wherethe materials are imported and onlylabor is added before re-export.Over the last 10 years, the Serbianfashion industry has evolved froma domestic, manufacturing-basedindustry into a design-orientedsector operating in the globalmarketplace. Over 1,500 companiesemploying 30,000 personnel operatein the Serbian textile industry whichincludes garment, textile and leatherproduction. This is nearly 2% of thetotal number of companies and 2.9%

of the total number of employees inSerbia, or 8.7% of employees in themanufacturing sector. The companiesin the textile and garment productiongenerate 0.7% of Serbia’s turnover.

TEXTILEINDUSTRYIN SERBIA

1SECTOROVERVIEW

Total Manufacturing Textile

productionGarment

production Textile

industry10

Enterprises

87,787 17,282 486 1,054 1,540

Employees

1,024,796 345,719 8,178 21,743 29,921

Turnover6,303,515 1,880,400 15,734 32,822 48,556

Basic indicators of textile industry enterprises in Serbia (2010)

10 subtotal of textile production and garment production

09


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Educational programs for garment are organized at:

▪ Faculty of Technology, Leskovacwww.tf.ni.ac.rs

▪ Faculty of Applied Arts, Belgradewww.fpu.edu.rs

▪ Technical Faculty “Mihajlo Pupin”, Zrenjaninwww.tfzr.uns.ac.rs

▪ The College of Textile – Design, Technology and Management, Belgradewww.vtts.edu.rs

▪ High Vocational Textile Technical School, Leskovacwww.vsstle.edu.rs

▪ Vocational Technical School Zrenjaninwww.tehnickazr.edu.rs

▪ Vocational Technical School, Ariljewww.ahilije.znanje.info

▪ Vocational School for Textile Design, Belgradewww.skolazadizajntekstila.edu.rs

▪ Vocational School, Somborwww.ss-svetisava.edu.rs

▪ Vocational Textile and Leather School, Rumawww.sssbr.edu.rs

▪ Vocational Textile, Technical and Agricultural School, Smederevowww.despot.edu.rs

▪ Vocational Technical School, Prijepolje

www.tsprijepolje.edu.rs▪ Accademia del Lusso School of Fashion, Belgrade

www.accademiadellusso.com

The textile industr y in Serbia boasts a highly qualified labor force on account of on its educational system, includingboth high-school and university levels. Tailors and technicians are educated in specialized high schools evenly spreadthroughout the country. Higher levels of education at specialized university departments offer post-graduate educationin related fields. Design experts are educated in numerous secondary schools, colleges, and universities.

Serbia’s strong tradition of textile manufacturing and exports yielded business-minded companies with highly skilled workforce.Companies have proven they have experience in maintaining customer relations and meeting customer requirementsaccording to international standards. This was substantiated by the stable number of employees within the industryduring the period 2010-2012, following the initial contraction in 2010 which resulted from the global economic downturn.

Number of employees in textile industry in the period 2009-2011

2009 2010 20110

5000

25000

20000

15000

10000

Textile production Garment production

Source: Statistical Office of the Republic of Serbia

Number of enterprises and employees within textile industry enterprises classified by size (2010)

Micro(0-9 employees)

Small(10-49 employees)

Medium(50-249 employees)

Large(250+ employees)

T e x t i l e

p r o d u c t i o n

T o t a l i n t e x t i l e

i n d u s t r y

G a r m e n t

p r o d u c t i o n

770 214 56 14

2,200 5,205 5,675 8,663

1,168 276 78 18

3,272 6,689 7,987 11,973

398 62 22 4

1,072 1,484 2,312 3,310


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jackets, men’s jackets, women’s cottontrousers, men’s cotton trousers, men’scotton shirts, etc. The most significant imports originatefrom Italy (23.0%, US$199 million),China (18.9%, US$163 million), Turkey(13%, US$113 million) and Germany(8%, US$69 million). The leading import co untries mainlyprovide materials such as:

▪ clothes, integral parts of textileproducts, ribbons and leather(Italy),

▪ clothes, bags, different kinds of

fabrics, yarns and fiber (China),▪ yarns, fibers and fabrics (Turkey),

▪ yarns and fabrics (Germany).

Other imports are distributed amonga greater number of importingcountries with a maximum percentageof 3.3%, individually. Some leadingimport countries from this group areRomania, Bangladesh, India, Slovenia,Belgium and the UK (2012).More than 60% of the textile industryimports arrived from EU memberstates, mostly covering various typesof yarns and fabrics. The foreign trade exchang e w ithinthe textile industry has had aconstant growth starting from

2005, ever since the free tradeagreement was signed between

the EU and the Republic of Serbia.

Nevertheless, the foreign tradebalance of textile products stillremains negative as it amountedto US$202.9 million in 2012.Exports covered only 76.6% ofimports. This was mainly a result of alarge scale of imports in goods suchas yarns and fabrics, while 90% of rawmaterials from the textile industrywere imported.On the other hand, when consideringclothing items, the foreign tradebalance is positive. In 2012, thesurplus was made by producers of

clothing, underwear and hosieryindicating that the textile industry is

ahead of the primary industry.

Export Import Balance

Jan - Dec2011

Jan - Dec2012

Index Jan - Dec2011

Jan - Dec2012

Index Jan - Dec2012

Manufacturing 10,904.5 10,526.8 97 16,274.1 15.397,1 95 - 4,870.3

Textile production 370.7 411.2 111 651.1 607,9 93 - 196.7

Garment production 256.1 251.6 98 261.6 257,8 99 - 6.2

Total for textile industry 626.8 662.8 106 912.7 865,7 95 - 202.9

Source: Chamber of Commerce and Industry of Serbia

Export and import of Serbian textile industry in 2012 (in million US$)

In 2012, exports from the Serbiantextile industry were valuedat US$662.8 or 6% of totalmanufacturing exports. It increasedby 6% compared to the same periodin 2011. The textile productiongenerated US$411.2 million andthe garment industry generatedUS$251.6 million in export in 2012. The most dominant export productsfrom the textile industry are: hosiery,leggings, bras, cotton vests, polyethylenebags and sacks, gimped yarns, tarpaulins,woven roofs, tents, sails, camping goods,shorts from synthetic fibers, rubberized

fabric, women’s sweaters, women’sdresses from synthetic fibers, men’scotton shirts, men’s trousers, knit shirts,men’s sweaters and pullovers, men’s jackets and blazers.

Major export markets, Italy andGermany, absorb more than 50%(51.7%) for an annual value of nearlyUS$350 million in exports in the lastthree consecutive years (2010-2012). These figures demonstrate consistentcooperation and client satisfaction.Other key export markets includingBelgium, Bosnia and Herzegovina,Croatia, France, Montenegro,Romania, Russia, and Sloveniacontribute to another 35.4% share ofSerbian exports.Significant growth can be noted inexports to the Slovenian market with a

270% growth over the same three yearperiod, while Romanian and Russianmarkets indicated a growth of 120%.As a whole, in 2012, the Serbian textileindustry imported about US$866

million in textile goods, which is 5%lower than the import of the sameitems in 2011. The textile industrycontributed to 5.6% of total importsfor the purpose of production. Textile production imported US$607.9million, which is 7% less than in2011. At the same time, the garmentproduction imported goods in theamount of US$257.8 million, 1% lessthan in 2011.Main import products from thetextile industry are: hosiery madefrom synthetic fibers, single yarn,dyed cotton materials, cotton

undershirts, gimped yarn, nylontextured yarn, quilts, impregnatedfabric, polyurethane fabric, bras andparts for bras, knitted fabric, denimfabric, women’s sweaters, women’s

12 13

THE TEX TIL E I NDU STRY I S AN I MPORTAN T E CONO MIC SEC TOR IN S ERB IA,

EXPORTORIENTED, AND LABOR INTENSIVE WITH TRADITION

ON THE EUROPEAN AND GLOBAL MARKETS.

EXPORTS REACH US$660 MILLION, 70% ABSORBED BY THE EU MARKE T.

Import value per market (US$1 mill., 2012)

50 100 150 200 2500

UK

Belgium

Slovenia

India

Bangladesh

Romaia

Germany

Turkey

China

Italy

S o u r c e : C h a m b e

r o f C o m m e r c e a n d I n d u s t r y o f S e r b i a

Export value per market (US$1 mill., 2012)

50 100 150 200 2500

Belgium

Slovenia

Romania

France

Croatia

Montenegro

Bosnia and Herzegovina

Russia

Germany

Italy

S o u r c e : C h a m

b e r o f C o m m e r c e a n d I n d u s t r y o f S e r b i a

2EXTERNAL TRADE


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3KEYCOMPETENCES▪ primary textiles and cotton fabrics

▪ men, women and kids clothing

▪ cotton sportswear

▪ knitwear

▪ hosiery

▪ underwear

▪ home and technical textiles

▪ leather processing and leather clothing

SERBIAN

TEXTILE

INDUSTRY

HAS THE

STRONGEST

CAPACITY IN:

Traditionally, Serbian companiesprovide the following types ofproducts and services:

▪ quality CM and CMT servicesprovided by Serbian companies is wellknown internationally, confirmed bythe presence of renown global brands

(Pompea Spa, Italy; Dolce&Gabbana,Italy; Patricia Pepe, Italy; Schiesser,Germany; Schoffel, Germany; EKDenim, Slovenia; Glitz, USA; Lisca,Slovenia; Modea Nova, Croatia; GSTsri, Italy; Tex Zeta, Italy; Fipko trade,Macedonia; Dimitri, Greece; Nasta Kids,Belorussia; Toprey, Turkey; CountryLine, Germany; Habitex, Belgium;Brothers and friends, Germany; LeonStreet Design, Germany);CMT (cut-make-trim) or CM (cut-make) are typically mode ofcooperation where a manufacturerproduces garments for a customerby cutting fabric provided by thecustomer and sewing the cut fabric

into garments following customerspecifications, while not beinginvolved in the actual design. ▪ Original Equipment Manufacturer(OEM) services are provided to a

lesser degree than CM and CMTservices, however, there is a potentialinterest from Serbian companies toextend their services toward OEM(Concordia, Belgium, Bikkembergs,Belgium; Decathlon, France; ClickFashion, Poland; Benetton, Italy;

Armani, Italy; HIS, Germany; Pionir,Germany; Karolina vanity, Germany;Atair, Germany; Nikolis, Greece; Fipkotrade, Macedonia; Garesnica, Croatia;Ivancica, Croatia; Labod, Slovenia;Olala, Slovenia; Velana, Slovenia; Trinity Yoga Wear, Netherlands; Exit,Poland; Euro-style, Russia; Mango,Russia; Penti, Turkey; Metro, Europe);OEM-related cooperation with foreignpartners, which typically consists ofmanufacturing according to customerdesign and specifications, in many cases,also includes the use of raw materialsalso specified by the customer.

▪ Brands – majority of Serbian brandsare perceived as brands of good

quality available at competitiveprices. Traditionally, Serbian brandshave had a strong presence on theregional markets, while leaders in thissector have a stronger international

presence including the EU, USA,post-Soviet states, Turkey andother markets.Existing Serbian brands are thefollowing: AMC, Exterra, Bisa,Azzaro, Guiseppe Leva, LegendWorld Wide, Infinito, Moda Futura,

Ivko, Jagger, Extreme Intimo,Extreme Collection, Line X, Girl X,Boz X, Jasmil, Kooi-knit, Leonardo,Luna, Exit, Maxers, Mona, Nicola’s,Passage, Stig, Sonka, Slonk, TFY

Production, TFY Jr, TFY, Todor, Intima, VR

Couture, Zekstra, P...S...Fashion, Martini

Vesto, St George, Evolution, Beba Kids,

Ramax, Bros, ClassX, BRUG, DenisStar,

Big Boys, Nesal, Exact Jeans, Bennelli

Jeans, Casaba, Amibo, Astra Socks,

Elipsa, Bramy, Gloster, Kassker, Modus,

Taboo, Valentino, Endi Knit, Moda

trikotaza, Onicelli, G.O.P, Conto Bene

Exelit, Allegra, Balasevic, Fratelli, Kodzic.

In addition to the above mentionedbrands, there are also a large number

of small companies which producetheir own collections. They primarilysell their products to the local, i.e.Serbian market, as they are notexport-oriented.

TRA DIT ION ALLY, SE RBI AN C OMPAN IES PRO VID E QU ALI TY CM A ND C MT

SERVICES AND HAVE DEVELOPED THEIR OWN B RANDS WHICH HAVE A

STRONG PRESENCE ON THE REGIONAL MARKETS.


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GEOGRAPHICAL DIVISION OF TEXTILE AND GARMENTPRODUCTION IN SERBIA

CAPACITIES FOR TEXTILE AND GARMENT PRODUCTION EXIST IN ALL PARTS OF SERBIA

SERBIAN TEXTILE COMPANIES ARE CAPABLE OF OFFERING CM OR CMTSERVICES AS WELL AS THE OEM BUSINESS MODEL OF COOPERATION. THEYPRODUCE DIFFERENT PRO DUCTS: BLOUSES CHEMISE; TROUSERS SKIRTS;

DRESSES; SUITS BLAZERS; COATS JACKETS; JEANS CASUAL WEAR;SPORTSWEAR; TSHIRTS, SWEATSHIRTS; KNITWEAR; SOCKS; UNDERWEAR;

WORK WEAR. THEY POSSESS THE EQUIPMENT FOR PROCESSES SUCH AS:CUTTING, SEWING, PRESSING, SPECIAL FINISHING, WASHING, DYEING,

PRINTING, EMBROIDERY, KNITTING AND HOSIERY PRODUCTION.CAPACITY FOR GOOD TEXTILE AND GARMENT PRODUCTION CAN BEFOUND IN ALL PARTS OF SERBIA, HOWEVER, THE INDUSTRY HAS SEVERAL

KEY CENTERS. TEXTILE SUBSECTOR HUBS WITH A HIGH CONCENTRATIONOF SPECIALIZED MANUFACTURERS ARE LOCATED IN NORTHERN SERBIA,

ADA MUNICIPALITY; CENTRAL SERBIA, ARILJE MUNICIPALITY AREA ANDSOUTHWEST SERBI A, NOVI PAZAR MUNICIPALITY.


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NORTHERN PART OF SERBIA

KNITWEAR MANUFACTURERS

CENTRAL PART OF SERBIA

LIGHT AND READYMADE CLOTHING ITEMS

SYNTHETIC YARNS

KNITTED UNDERWEAR

WORK WEAR

COTTON YARNS AND FABRIC PRODUCERS/ SPORTS COTTON WEAR ITEMS

The Ada Municipality is situated in the nor thern part of Serbia (AutonomousProvince of Vojvodina) close to the Hungarian border. On the territory of the AdaMunicipality there are a significant number of enterprises from the agriculture,metal and textile industry (mostly knitwear). The garment producers from thisarea are generally small and medium-sized, family-owned businesses focusingon knitwear production.

Useful links: www.ada.org.rs - Municipality of Ada

The larger producers of light and ready-made clothing are situated in thecentral part of Serbia. Belgrade boasts many significant private textile andgarment companies. These companies enable greater flexibility in operationsand quick adaptation to current fashion trends.

Useful links: www.clusterfacts.org.rs - Fashion Apparel Cluster in Serbia ‘FACTS’

www.lzoteks.rs - Cluster of Textile Producers (producers of work-wear)


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WESTHERN PART OF SERBIA

JERSEY

KNITWEAR

20 21

Arilje is a town located in the western part of Serbia; in the Zlatibor District.In 2002, the town’s population was 6,733, while the municipality had atotal 19,784 citizens. Arilje is famous for their large raspberry plantationswhere many locals are employed. In addition to the agricultural sector,approximately 100 companies operate within the apparel sector,particularly in the production of underwear, T-shirts and sweat shirts.

Useful links: www.arilje.eu - Entrepreneurs Association of Arilje

SOUTHERN PART OF SERBIA

JEANS WEAR

KNITTED UNDERWEAR

COTTON AND SYNTHETIC YARNS

Southern Serbia is also known for its cotton and synthetic yarns manufacturers. There are two large public enterprises surviving on lohnveredelung (CM/CMT)businesses as well as on public procurement contracts with Prvi maj andYumco, both from southern Serbia. Also, one large enterprise (Niteks) has been

purchased by Benetton.

Useful links: www.asstex.rs - Association of textile producers (predominantly jeans wear producers) www.nistextil.com – Textile Cluster of Nisava District www.startupclusternis.co.rs – Textile Startup Cluster

Novi Pazar area leading in jeans and sportswear manufacturers, is situatedin the southern part of Serbia. With production capacities of about 19million meters per year, the textile industry is now the main industry in NoviPazar. Approximately 40 percent of production in Novi Pazar is for exportpurposes. The main export markets are Bosnia and Herzegovina, Croatia, andMontenegro. The large firms have their own brands but also manufacture forinternational companies.

21

KEY


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KEYSTRENGHTS

▪ VALUE FOR MONEY COMPETITIVE COST FOR HIGH QUALITY PRODUCTS AND SERVICES

▪ SHORT DELIVERY TIMES AND FLEXIBILITY IN MINIMUM ORDER QUANTITIES

▪ T RANSPORT ADVANTAGES DUE TO CLOSE PROXIMITY WITH EU MARKET AND SUPPLIER S

▪ FLEXIBL E, RELIABLE AND QUICK DELIVERY TAILORED TO CUSTOMER NEEDS

▪ BUSINESS OPPOR TUNITIES IN YARN, FABRIC, AND READYMADE GARMENT PRODUCTION

▪ GOOD GEOGRAPHI C LOCATION AND FAVORABLE ECONOMIC SITUATION

▪ FAVORABLE TRADE AGREEMENTS WITH EU, RUSSIA, USA, CEFTA

▪ SOLID CONDITIONS FOR COMPLETE BUSINESS OPERATIONS/COMMISSION PROCESSING

▪ LONG TRADITION IN PROVIDING SERVICES TO GLOBAL INDUSTRY LEADERS

THE SUBCONTRACTING COSTS IN SERBIAARE AMONG THE LOWEST IN EUROPE

Garment production in Serbia has relatively low subcontracting costs of 0.09 – 0.10 EUR/minute, with even lower rates insouthern Serbia of €0.07 – 0.08 per minute.

Subcontracting costs

Germany

0.72

Bulgaria

0.08-0.09

Serbia

0.09-0.10

Italy - South

0.42

Italy - North

0.58

Spain

0.24

Austria

0.65

Albania

0.06-0.07

Macedonia

0.08-0.09

Turkey

0.10-0.15

Greece

0.2

Bosnia and

Herzegovina

0.08-0.09

Source: Weis Consulting Assoc. GmbH

WHY SERBIA:

Ireland

Denmark Lithuania

The strategic positioning of Serbia


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Romania

Germany

Bulgaria

Belgrade

Italy

Portugal

Spain

France

Slovenia

Belgium

Switzerland

Netherlands

United

Kingdom

Poland

Czech

Republic

Austria Hungary

Albania

Macedonia

Turkey

Ukraine

Belorussia

Greece

10th Pan–European Corridor

7th Pan–European Corridor

Croatia

Slovakia

Montenegro

Bosnia andHerzegovina

25

The strategic positioning of Serbiaprovides quick delivery, whiletransportation costs are extremelycompetitive. A hanging transport costfrom Serbia to the EU is approximately

€0.23 per garment.Serbian textile companies caneffectively serve as secondary sourcesof high-quality textiles for Europeanretailers. They can react swiftly tosmaller orders with quick turnaroundtimes. Competitively-priced labor,as well as a strong textile traditionin Serbia, ensures manufacturing

of high-quality products at verycompetitive prices.

24

BUSINESS AND INVESTMENT OPPORTUNITIES


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There are significant capacities inproduction of certain raw materialsand other integral parts for textileproduction such as:

▪ leather

▪ cotton fabrics, different types ofyarns, fiber and fabrics

▪ integral parts of textile products(labels, shoulder pads, other)

On the other hand, insufficient

capacities in the production ofyarns, fibers and different typesof fabrics is compensated withimports from China, India, Italy,Spain, Turkey and Slovenia.Due to the complexity and variety ofmaterials and other parts integratedinto textile products, a number ofproducts which belong under thecategory of integral parts of textileproducts are also imported fromChina, Germany, Italy and Romania. The fact that the textile industryis highly dependent on imported

materials creates extensive opportunitiesfor investment in this field. In orderfor Serbian textile producers to benefitfrom the existing agreement with theEU, it is required that all raw materialsused in the production of textiles andgarments are of either Serbian or EUorigin. Since importing raw materials

from the EU raises the price of thefinal product, it would be significantlymore cost-efficient for the rawmaterials to be of Serbian origin. Anyinvestment which would be madeinto the production of domestic rawmaterials would have a quick return,

as any raw materials produced locally

would almost guarantee the sale ofthese items.Many business opportunities can befound in the production of ready-made garment. The industry has large capacityfor CMT with quality and deliverytimes which can appease even themost demanding clients. Serbia hastraditionally cooperated with manyforeign partners and has been one ofthe leading garment manufacturersfor luxury brands. Fashion industries ofFrance, Germany and Italy intensivelyused production capacities in thecountry together with highly qualifiedand low-priced labor. Clients have

included Gucci, Hugo Bos s, Valentino,Dolce&Gabbana, Benetton, TommyHilfiger and many more.Moreover, Serbian companies’competitive advantages includedesign, full-package and private labelcapabilities, as well as the ability tooffer collections to customers, withreliable and high-quality production.Compared to other countries in theregion, Serbia is well known for largenumber of domestic companieswhich have their own brands. Thesecompanies are able to set-up an OEMmodel of cooperation with foreigncompanies which includes takingresponsibility for material sourcing,logistical coordination and canprovide all the production servicessuch as finishing and packaging forfinal delivery to retailers. Those Serbiancompanies which have developed

their own brands are quite interestedin the OEM model of cooperation, inparticular with those markets wherethey do not sell their own products. The great offer of the OEM model isthe competitive advantage of Serbiangarment production in comparison

with other countries from the region.

In terms of the number of investmentprojects and jobs created, the textile

industry ranks quite high on the listof sector attractiveness. Companiessuch as Benetton, Calzedonia, GoldenLady, Pompea and many more areextensively using their productionfacilities as secondary manufacturingsites for the production of high-quality garments.

The largest foreign direct investment,when it comes to textiles, wasrecorded in hosiery production,primarily due to the status of theMost-Favored-Nation, granted toSerbia by the US in 2004/2005.As a result, tariff rates for hosierymade in Serbia are lower than tariff rates for EU hosiery towards theUS market. It is for this reason, thatItalian hosiery firms such as GoldenLady and Calzedonia as well asGermany’s Falke, are produced inSerbia today.

TEXTILE INDUSTRY

IN SERBIA PROVIDES

NUMEROUS BUSINESS

OPPORTUNITIES,

PRIMARILY IN YARN,

FABRIC AND READYMADE

GARMENT PRODUCTION.

MORE THAN 25

INVESTORS HAVE

ALREADY TAKEN

ADVANTAGE OF THE

OPPORTUNITY TO INVEST

IN SERBIA’S TEXTILE

INDUSTRY.

WWW.SERBIANAPPAREL.COM

SERBIAN APPAREL

For more information about Serbian manufacturers,fashion labels and designers please search our DATABASE

CLOTHING


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COMPROM PLUS

I YR

CLOTHINGANDTEXTILEINDUSTRY

FDI

SERBIA


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Serbia Investment and Export PromotionAgency (SIEPA) was established morethan a decade ago and entrustedwith the mission to support foreigncompanies seeking to set up or expandtheir presence in Serbia and Serbiancompanies doing business abroad. Today, a staff of nearly 50 multilingualemployees handles projects from andto all over the world.We provide professional services tocompanies interested in setting upbusiness operations in Serbia, focusingon all relevant issues in their decisionmaking process. Our staff is ready to offer

information on the general investmentenvironment, as well as targeted legaland industry-specific advisory services.Our network of contacts provides linksto all levels of government, as well asprivate service providers.By administering the financialincentives program offered by thegovernment, we have supportedopening of more than 40 thousandnew jobs since the launch of theprogram in 2006. At the same time,we have technically and financiallysupported thousands of Serbiancompanies in increasing their

competiveness at global markets.SIEPA’s work is widely recognized,with World Bank’s MIGA rankingSIEPA among the top five IPAs ofdeveloping and countries in transitiontopping the list of our internationalacknowledgements. The list ofour clients includes Fiat, Benetton,Panasonic, Bosch and many otherglobal and regional industry leaders.We invite you to contact our expertstaff which is ready to assist you indeveloping your business in Serbia.Working with us is simple, easy, andstill costs nothing.

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SERBIAINVESTMENTAND EXPORTPROMOTION

AGENCYWWW.SIEPA.GOV.RS


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Serbia Investment and Export Promotion Agency

3, Vlajkoviceva St. 5th floor, 11000 Belgrade, Serbia

phone: +381 11 3398 550; fax: +381 11 3398 814

e-mail: [email protected]

www.siepa.gov.rs; www.doingbusinessinserbia.com

www.serbianapparel.com

SUPPORTED BY:

Textile Industry in Serbia

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