Romanian companies dealing in the knitting industry are facing new competition: the cheap workforce and imports from the Asian countries. The Romanian producers say their foreign partners are beginning to consider relocating production to these countries, leaving Romania out, which shows in the development of the domestic market.
"The Romanian knitting industry plunged last year, which is due, besides the slowdown in the US, to competition from Asian countries such as Korea, China, Taiwan, Indonesia and Pakistan, in addition to Turkey, in terms of salary costs and product prices," said Ioan Stratila, general manager of Rifil Savinesti, a wool and synthetic fibres producer. He added this competition was precisely one of the reasons why the company had seen profit drop from $4 million in 2001 to $1.6 million in 2002.
As for the workforce, the Rifil manager says that, whereas Romania's salary costs amount to about 4,000 euros per employee a year, taxes included, China spends about 1,600 euros a year. The average gross salary in the textile industry amounted to 3.9 million ROL (about $120) early this year.
"The major companies may be indeed contemplating the Asian countries, because Chinese workers do not ask for much money, but there's nothing we can do to stop the foreign companies from relocating production to that part of the world. If the Romanian producers want to counteract the effects of this trend, then they have no way but to create and develop their own brands," Turcu Dumitru, director of the Tricontext patronage said. He added there had been no massive migration to Asian countries yet, because the distance between the production place and the outlet was too great, which entailed transportation costs.
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