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Exports by clothing companies in Kyrgyzstan increased by $20
million in the first ten months of 2011, according to figures released by the
country’s statistics office earlier this week. This is double last year’s
growth rate, a welcome news to a government battling a record trade deficit,
with exports barely reaching half of the country’s imports. “This shows the
government made the right choice when identifying the clothing sector as a
priority sector for exports,” said Gulbarchyn Asanova, who until her retirement
last month ran the department in charge of the country’s processing industry at the
Ministry of Economic Regulation, and represented the government at the steering
committee of local ITC projects.
ITC has played an important role in the sector’s performance
in the last two years, its trade promotion project extending to 40 SMEs in the
sector. The industry association representing the sector has 600 members. The
government does not collect labour statistics that would be granular enough to
show the effect of the industry’s growth this year on employment numbers, but
anecdotal evidence shows both job creation and wage increases at ITC-supported
companies. Both have been made possible by new sales contracts, and quality and
productivity improvements at the companies. Primavera, located in the capital
Bishkek, has increased its revenues by 30% and its headcount by 20% this year,
said 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 a quarter since the
beginning of the year. Many of them have participated in training courses, which
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.” A course that taught her how to negotiate
with suppliers has pushed down her raw material costs by 10% - increasing her
margins and thus funds available for investment.
Across town at Lilastyle finding new buyers and moving up the value chain have been key benefits. Lilastyle, which is manufacturing girls prom dresses for the Russian market, has doubled the unit sales price of its products over the last couple of years, said owner Tatiana Pavelnko. At the ITC project she and her colleagues have learned how to make the most out of participation in industry fairs and how to present their company and products to potential buyers. Pavelnko, who gave up a low-paid teaching job and undusted her grandmother’s sawing machine in the late nineteen nineties to make her first blouse, now employs 50 people. She had attended sales fairs before and had vague ideas about quality management, but it is only thanks to the ITC project that she could implement them. “We knew what to do, but we did not know how,” she said. Many international consultants funded by other technical cooperation projects fly in and out, providing high level advice. In contrast, ITC’s project provides concrete, implementable recommendations and a game plan for the company to follow even after the consultant leaves. ITC also trains local consultants for businesses to work with after the initial project comes to an end. While Lilastyle’s participation in the ITC training was free, and the exhibition attendance partially funded, Pavelnko has subsequently created a training budget and paid the full price for seamstress training. “The benefits clearly outweigh the costs,” said her son Anton, who is helping his mother manage the company.
The textiles and clothing sector 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 due to its high potential for
exports and so combating the country’s galloping trade deficit. The German
technical cooperation agency assisted the company with the creation of a sector
strategy in 2008, and what at the time was the Ministry of Industry, Energy and
Fuel Resources approached ITC to implement a trade promotion project focusing
on the sector. The total budget of the project over three years is $1.84
million, financed by the Swiss Secretariat for Economic Affairs (Seco).
Though only 15 companies are official participants, ITC’s
Bishkek field office is working with industry association Legprom to organize
seminars open to any of the association’s 600 members, explained Project
Consultant Artur Aliev. As a result, about 40 companies benefit from the
project directly, while indirect beneficiaries include their subcontractors and
suppliers.
The companies have achieved significant improvement in the
quality and design of their products, Asanova said. What distinguishes ITC
trainings from those organized by other intermediaries is its comprehensive
approach and the amount of practical detail offered, she said, from new stitching
techniques to skills in preparing a sales presentations and negotiating.
“Participants appreciate the details; some of them never focused on their
customers before,” she said.
Seamstress training
in a week
An element of the project highlighted by several
participants was “3G Tailor,” a seamstress training methodology that cuts down
by three quarters the amount of time required to train a new employee. In an
industry with high turnover rate and the dominance of unskilled labor, 3G
Tailor is addressing a key bottleneck, explained Damira Aitykeeva, who heads
the Garments Design Department at the Kyrgyz State University of Construction,
Transportation and Architecture. Aitykeeva, who has participated in the ITC
project as a national consultant on productivity and production, has
incorporated into the university curriculum many of the innovative ideas she
learned from ITC’s international consultants. This will bring major benefits to
the industry in the long run and ensure the sustainability of the project. “What
this industry is lacking is competent middle managers,” she said. “Modernizing the curriculum and making students focus more on their future
clients will address this issue going forward,” she said.
None of the 15 companies Aitykeeva works with had any
organized quality control in place. They did not even measure their defects. Productivity
was low as a result, and the quality of the products not suitable for anything
but the low end of the export markets. “Many of these companies were founded by
people who were not from the industry, but were traders, or even teachers and
lawyers,” she explained. As part of the project, Aitykeeva was trained by ITC’s
international consultants and has taken over following-up with beneficiary
companies. As part of her work at the university, she has added two more
companies as clients, and she sends her students as interns to small firms in
Kyrgyzstan and Tajikistan.
Tangible benefits notwithstanding, the real result of the
project that will ensure long lasting impact has been the change of mind set in
the industry, said Asanova. Managers are more conscious of the needs of their
clients, and they are more open to share knowledge and exchange ideas with
their peers. In a fragmented industry, this is key to competitiveness, she
said. “They used to view each other as competitors, rivals,” she said, but have
now realized that there is a much larger world out there against whom they are
all competing. Information gathered at industry fairs, as well as requests from
potential clients are now disseminated to all members of the industry
association, Legprom. Asanova concluded:
“In a former Soviet country where people are suspicious of each other, this is
a major achievement.”
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 new, 750 square meter plant in two years. As for Kim, her
plans are focused on helping some of her middle managers to open up franchise
operations, using her techniques, methodologies and sales channels. “I have
many plans, but the key is having great employees,” she said “We need to
continue to invest in our people.”