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MAJOR CHARACTERISTICS

The Apparel and Textiles Industry is a one of the most labor intensive industries in Armenia consisting of approximately 90% female employees. The industry is operating at about 38% of capacity for those manufacturers who are still in business and represent about 0.3% of 2002 GDP.

The light industry included 154 registered enterprises in 2000. Privatization of textile companies is still in the process, though more than 75% of the companies have completed this process. SMEs (with average of 20 employees) are a small portion in enterprise structure of the industry; whereas the majority of plants currently employ more than 300 workers on average. Yet, some of these big enterprises are often working with 25-35% capacity, underutilizing both their equipment and space.

The primary strengths of the Armenian clothing industry are: abundant, inexpensive and experienced labor force; depreciated off equipment and plant assets; no tariff or quotas for the large CIS market, no quota to US. The industry must quickly adapt to a fast paced, consumer driven market and adopt competitive marketing and sales techniques to take maximum advantage of current opportunities.


BACKGROUND

The Armenian clothing and textile industry in the Soviet economy was major supplier of garments and textiles. At its highest level the sectors employed 115,000 people, 25-30% of the country’s labor force during the 1980’s. The industry was built around massive plants that supplied a significant amount of clothing and textile products to the Soviet system.

The equipment in the companies is generally of German, Japanese, Italian and East European brands. Quickly after the privatization, AMEREX, an American company from New York, developed sub-contracting arrangement with fifteen companies since mid 1998 and contributed to the boom of exports to USA. Yves Martin, a Canadian company has also developed sub contracting in the field of knitted underwear with 3-4 companies. Benetton had three years joint venture with one on Armenian companies. Another US based company, Cherokee, had a contract for medical uniform imports from an Armenian company. Italian lingerie Lovable is being made in Armenia for already the seventh years.


MARKET

Usually the western buyers are European and American companies or individuals in the Armenian Diaspora. One of the main markets remains the CIS countries with which Armenia enjoys free trade privileges. A permanent Armenian Pavilion to demonstrate and sell products made in Armenia was opened at the Moscow National Exhibition Center in 2003.

There has been an 82% increase in the sale of Armenian textile companies just in two years. In 2002 the total apparel and textile sector output was about $6.4 million.
The installed capacity yet to be exploited for export purposes remains significant with a high potential for upstream linkages into textiles.



EMPLOYMENT

The textile industry that once employed more than a quarter of workforce of Armenia now is recovering its volumes. Huge plants now employ 300 people on average, which is increasing every year. Number of employees can triple in nearest future, when companies enlarge their sales on already built trustworthy relations and trade.



EXPORT and IMPORTS

Exports have increased significantly during the past two years. Exports grew by 18% to total of approximately $28.7 million in 2002. Meanwhile, imports had slightly declined (1%) and amounted to $35.6 million in 20025. Armenia imports mostly textiles, yarn and cotton wool, as well as some ready made apparel. The duties in the country for textiles and garments vary from 0 to 10%, depending on the product. Major exporting countries were the US and Russia.
The main products to both countries were woven clothes with 87% of export to the States and 61% - to Russia and knitwear with 7% and 22% respectively. The rest portion is split between knitted fabrics, cotton and other ready made textile goods.

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