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June 2019, No. 91


Character

Mohammad Etemad,
Top Entrepreneur in Iran’s Apparel Industry

Mohammad Etemad is one of the leading entrepreneurs in Iran’s clothing industry. He worked during daytime and studied at nights simultaneously. He worked in the Carpet Company for a while, then turned to the press and pursued his work in the field of advertising. After the 1979 Revolution he established the Maxim clothing company. First, he only produced shirts, then pants, suits and at the moment is active in the field of producing full garment set so that the customer, by entering into the Maxim store, can buy everything from socks, bags and shoes up to suit, overcoat and raincoat.

Currently, Maxim is one of the major clothing brands in Iran products of which have attracted the attention of the public.

Under the pretext of introducing   Mr. Mohammad Etemad as a top entrepreneur in apparel industry in Iran, we take a glance at the current situation of this industry:

The textile industry is among the biggest, most important and oldest industries of the world which has attracted the attention of most world countries and the grand economies due to providing high job opportunities and because of its extraordinary role played in industrial, economic and social fields. Its diversified advantages such as providing high job opportunities, generating hard currency, producing national wealth, needing less investment in comparison with other industries, and its high added value have all encouraged many countries to begin their industrialization only with the textile and clothing industries and still make progress in the knowledge-based fields with high added value. Among successful policies in the advancement of the industry which has almost been executed in all pioneering countries (such as China, India, Turkey, Vietnam, etc.), is attraction of foreign investment the prerequisite of which in the first step is making production costs competitive and then facilitating the proper business environment, signing free and preferential trade contracts with the target export markets and maintaining infrastructures, financial facilities and export incentives. Furthermore, gaining access to the raw materials, inexpensive and skilled manpower, overall support of the governments, diversified incentives and tax exemption, are considered as the domestic and foreign incentives in the industry.

The clothing industry is at the same time one of the major industries in the country which not only causes no problem for the environment but can also create wide range of job opportunities and generate a high value added in the economy.

The garment industry in the country has been faced with numerous problems over the past years, the most important of which being irregular imports from other countries, a problem that forced many manufacturers to shut down their units. The inclusive employment plan presented by the deputy for entrepreneurship development and employment of the Ministry of Cooperatives, Labor and Social Welfare emphasizes on the economic privileges of the country, including the clothing industry.

Director of the national plan for development of business and sustainable employment said while the garment industry in Iran has 860,000 workers, there are nine million people working in this industry in Turkey. Reza Taziki, comparing the clothing industries in Iran and Turkey said: “The population of Turkey is around 80 million nine million of which are active in the garment industry; the country is the world’s largest exporter of socks and jean fabric and the world’s fourth largest exporter of apparel industry.”

He continued by saying that up to the year 2023, Turkey’s textile and clothing exports will rise to $80 billion, and wages in the clothing industry are four to five times higher than in China, India, Thailand and Indonesia. According to Taziki, Turkey has invested 11 percent of the GDP in modern technologies and machinery.

Saying that Iran’s population is about 80 million like Turkey, he noted that the per capita consumption of clothing in Iran is $185 and the size of Iran’s apparel market is estimated at $15 billion. The director of the national ‘takapoo’ (searching) project said: “However, 860,000 people are active in the textiles, clothing and spinning fields in Iran and the share of the clothing sector is 550,000 people.”

He put domestic garment production in the clothing industry at less than $6 billion and said about 35 to 40 percent of Iran’s domestic apparel consumption is supplied by the Iranian producers. Taziki said the amount of garment exports from Iran to Afghanistan and Iraq was $40 million, adding that with the continuation of such a trend, there would be no perspective for the country’s clothing industry; in other words, the industry had not been prioritized by Iran’s industrial and economic policymakers.

A glimpse at the record of the current big figures in the textile and clothing industry of the world shows that just at the very juncture when they were trying to match the fabric industry with their clothing industry, we created a great wall between the two industries, and with regard to the exhaustion of the textile machinery, we attributed production of poor quality fabric in Iran to the prevalence of foreign fabrics in the apparel industry. Right at the same time when Turkey and China were trying to reduce industrial production costs, in Iran, due to the prevalence of a terrible economic disease and double parity foreign currency, production costs increased each day.

In this regard, as the statistics say, about $2.6 billion worth of garments are shipped annually to Iran, while 20,000 sewing units are active in Iran creating jobs for 300 thousand people who are compelled to compete with foreign brands in an unequal condition. But this is not the whole story; the other side of the coin is the time when the irregular smuggled goods are flooded into the country and no producer can compete with it. If we say that smuggling has damaged this industry, we have passed the ball from our own country because Iran’s garments are being distributed under Arab and Turkish brands, but we have problems inside our own country. This group of experts believes that if beliefs are reformed and Iranians believe that they can provide for the country’s textile products with presumptions and rigorous methods, it will help the development of the industry.

Of course, at present, Iran’s textile exports amount to one billion dollars, which according to experts, could increase by three times in the short term. Therefore, it seems that the leading and progressive countries in the textile industry and textile machinery in the world will take this historic opportunity and use it properly for entering the Iranian market, but our country’s textile and clothing industries should strive not to prepare the ground for the emergence of smuggling in the country which will incur losses on the domestic producers.

The apparel and textile market has always been hit by the smuggled goods into the country, which has led to the lower levels of production and even closure of countless units in the industry. Mohammad Mehdi Raeiszadeh, Secretary General of the Association of Iranian Textile Industry, saying that the coefficient of the penetration of clothing imports to Iran is one and a half times bigger that the world average, noted that the issue of smuggling is the most important problem facing the textile, especially the garment industry, in the country. With the growth of the import of the smuggled clothing into the country in the past decade and hitting the target of $6 billion, about half to one million jobs were lost in the country. According to the official statistics of the Customs Administration, official import of the textiles and clothing in the past 10 years amounted to $23.7 billion, but the statistics for the smuggled textile and clothing was $25 billion over the same period, which means the total imports of clothing and textiles amounted to $60 billion, including $10 billion in 2011.

Raeiszadeh referred to the high margin of profit for the sellers of the smuggled clothing as the most important reason for Iran gaining the first rank in the smuggling of textiles and clothing with fake brands. He added that 75% of the total discoveries of the smuggled clothing in the country belong to China and 9% to the UAE, the countries which stand on the top of exporters of clothing with fake brands.

Therefore, it can be said that the market for speculations about the future of the Iranian economy is very booming after the lifting of the sanctions. Some in the not-too-distant past, considered the sanctions the most important problem in Iran’s economy and believed that by removing them, a huge opening would be created in the economic situation of the country, on the other hand, others believe that lifting of the sanctions will only facilitate export and import, as the internal problems of the Iranian economy should be resolved in other ways.

 

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  June 2019
No. 91