Turkey Loses Major Apparel Buyer as Sourcing Shifts to India

An international apparel customer plans to close its Turkey office and shift all sourcing to India, Turkey Exporters Assembly President Mustafa Gültepe said. The buyer had purchased an average of about $250 million in goods from Turkey annually until about one and a half to two years ago.

Gültepe said he learned of the decision during a meeting with the customer’s Turkey office manager and its UK sourcing director. He said the customer rejected his proposal to keep the Turkey office open for higher-value production.

One factor, Gültepe said, was a UK-India free trade agreement that would remove a 12% tariff on apparel products. He said the change strengthens India’s price advantage over Turkish suppliers.

Gültepe argued that weak foreign demand does not explain Turkey’s export difficulties. He said demand for textiles and apparel in Europe had risen by 4% to 5%, but Turkey was not capturing enough of that growth.

He said Turkish production had previously been about 10% to 15% more expensive than China and up to 20% to 22% above other competitors, depending on the sector. Gültepe put the current gap at a minimum of 60%, citing rising labor, energy and raw-material costs and exchange-rate increases that had not kept pace.