Turkey prides on having a strong garment and textile manufacturing unit, one that is pretty alluring for firms who are seeking new sourcing destinations. Turkey sourcing is becoming quite popular among the firms. But serious economic and political factors should be kept in mind when you are planning to combine Turkish manufacturers into the supply chain.
For manufacturing textile and apparel goods, Turkey is considered an attractive destination. Located at an important place between Asia and Europe, straddling geographic, economic and political lines, Turkey serves the maximum advantage for sourcing and procurement. Currently, the corporate tax is at 22%, which is 3% lower than two of the most top clothing exporting competitors, Bangladesh and China.
In an attempt to make investing and business thriving in Turkey as alluring as possible, the system has been made easy to initiate a business in Turkey. Furthermore, the government has provided sets of subsidies and incentives, which are aimed at fortifying and enlarging the manufacturing industry during Turkey procurement.
Is Choosing Turkey for Sourcing is Worth it?
With a total workforce of almost one million, nearly fifty-three thousand factories generate billions of dollars’ worth of textile and clothing goods each year. The fact is that in the year 2017 Turkey exported apparel goods worth of $14.8 billion, and the goods include sportswear. 73% of the majority of goods were exported to the EU.
How Labor Pose a Competitive Disadvantage?
Though Turkey has a skilled and sizable workforce, the labor costs are about $550 per month in comparison to other manufacturing stores. The only struggle it faces is competing with low monthly wages with nations like Pakistan ($100), Bangladesh ($65), Vietnam ($114-$166) and China ($150-$275). This is the main element for a labor-intensive industry, where labor accounts for up to 30% of costs. During Turkey sourcing, you will find the cost of labor is different in Turkey and other nations, and it is gradually shrinking. This is recently pushing Vietnam and Bangladesh to escalate workers wage by 8% and 192% respectively. However, in China, the monthly wages have risen to 188% by the last decade.
Despite all the issues, Turkey is trying to boost its competitive edge through its investment and development. Turkey’s main aim is to achieve exports worth of $500 billion and GDP of $2 trillion by 2023. The country is already into improvements and growth as a part of this plan. For this, the country is planning to add roads and railways for easier shipping and also increase the number of logistics stores at the same time. Increasing the specialized materials is yet another way that Turkey has sought to improve its export value.
Turkey cannot be ignored as a major textiles producer and trading partner. Companies have to be smart during Turkey procurement, especially, if a company wants economic growth. Though Turkey’s workforce, proximity and labors’ skill prove to an advantage, the risk factors should not be forgotten for ethical reasons.
