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ethiopia bets on clothes to fashion industrial future
Plaid shirt from Gap, an American chain.
Swedish H & M shop slab yoga leggings
German Tchibo twill shorts.
They are a big brand of gym clothes for women that are more and more stitched together in Ethiopia.
With rising labor, raw materials and tax costs in China,
Major textile manufacturers in the world
Countries in the Horn of Africa are scrambling to offer cheaper alternatives and with the established low
Cost garment manufacturers such as Bangladesh and Vietnam.
It\'s still too early, and most clothing companies looking for production sources in Ethiopia are testing smaller waters.
But the government is trying to attract their business through tax cuts, subsidies and low-interest loans.
This inland country is also about to open its last paragraph of 700 km kilometers (450-mile)
Power rail to the coast of Djibouti.
This is part of an effort to turn one of Africa\'s poorest countries into a manufacturing hub that is no longer subject to cyclical disruption to the agricultural economy and hungry its people
Some progress has been made;
Foreign investment in the textile industry from 4. 5 billion birr ($166. 5 million)
Between 2013/14 and 36.
Government institutions Ethiopia Investment Committee tell Reuters 8 billion years 2016/17.
\"This is a huge success,\" said Arkebe Oqubay, Prime Minister adviser to the industrialized process, at the inauguration of an industrial park in the northern town of Kombolcha this summer.
\"The challenge now is to get the world\'s largest companies into the country.
\"Some have arrived, most of which are sourcing products locally, such as Gap and H & M, but there are also some that build their own factories.
This year, including the United States to build factories. S.
The brand includes the fashion giants PVH including Calvin Klein and Tommy Hilfiger; Dubai-
Based on VelocityApparelz, supply Levi\'s, Zara and Under Armour;
There is also China Sunshine Group, whose customers include Armani (Giorgio Armani) and Hugo Boss ).
The Investment Commission said that French retailer Decathlon and more than 150 companies from China and India will soon start purchasing products from Ethiopia.
However, although Ethiopia is going faster than its mainland rivals, there is still a long way to go.
Logistics, bureaucracy and cotton
The quality problem threatens its ambition and does not guarantee that it can compete with big companies around the world.
There is a great gap in textile exports;
According to the latest data from the World Bank, in 2015, Ethiopia totaled about $0. 115 billion, Vietnam was $27 billion, Bangladesh was $28 billion, and China was $273 billion.
The fledgling sector of esse fledgling can\'t afford the kind of working conditions scandal that plagues low-income classes.
Officials said they would send delegates to Asia to learn best practices.
In many places, the road connection between Ethiopia and the Port of Djibouti has been outdated and crowded, and with its limited customs service capacity and dense bureaucracy, the company\'s supply chain has slowed.
This is weakening the benefits of being closer to European markets than most Asian competitors.
It takes 44 days from clothing consignment leaving the factory to arrive at European buyers, compared with an average of 28 days for Bangladesh and an average of 21 days for China, according to a report for investors this year from the Institute for Textile Development in Ethiopia.
This increases the cost.
Export A $40 price up to $1,870
According to an internal report compiled by major European clothing retailers and seen by Reuters, foot container is $1,290 in Bangladesh and $679 in Vietnam.
However, officials said that the $4 billion electricity railway to be opened in the next few weeks between Yadis Abba and the Red Sea will allow transit time to the port of Djibouti from 2-
3 days to 8 hours
Bill McRaith, chief supply chain officer for PVH, based in New York, told Reuters that his company saw sub-
With rising costs and labor shortages in established countries, sub-Saharan Africa is a promising new frontier for manufacturing.
PVH arrived in Ethiopia this summer and will build a factory in holhasa, south of adeabba.
One investment McRaith says is based on long-term
It has long been expected that Ethiopia will become one of the most competitive places in the world, producing clothing for the West.
He said PVH plans to produce $100 million worth of garment exports at the factory each year.
\"Basic operating costs are very attractive but offset by shipping,\" said McRaith . \".
\"Transportation infrastructure, skills training, banking. . .
\"We all have to improve,\" he added . \".
\"But, in this regard, the government of Ethiopia is more ahead than many other countries.
\"The quality and price of cotton has also become a major obstacle to the desire of Ethiopia --
It is weakening its competitive power and hindering foreign investment.
It is estimated to have 2.
6 million hectares are suitable for cotton cultivation, and only 130,000 hectares have been used so far, and textile company owners say their production is 10 times more expensive than the international average price.
Due to pollution and poor processing, their exports are often unqualified, resulting in poor fabrics.
While the government is trying to attract investors into cotton farming, the situation has become more complicated due to the lack of land management and the complexity of property rights.
Six months ago, VelocityApparelzCompanies began production at a $50 million factory in the north of Essel. It produces 1.
Erica vanSchaik, executive assistant to the executive chairman of Velocity, said that there are 5 million pieces of clothing per month, but the goal is to double in two years.
However, the quality of domestic fabrics means that the company must import denim fabrics, VanSchaiksaid said.
Good local materials can reduce the cost of Velocity by half, thus releasing cash that can be invested in Esher production.
Will also shorten the company\'s lead time
From the beginning of production to the arrival of the store
She said from 110 to 90 days.
\"It\'s like a day --and-
It\'s a little different at night. A game-changer.
Investors also face other challenges: foreign exchange shortages complicate trade
The limitations of the financial system mean that many foreign enterprises
The use of offshore banks by its own textile companies to trade has deprived Ethiopia of important hard currency.
As the conditions and safety of workers are a matter of great concern to investors, the Institute for Textile Development in Ethiopia says its leadership is heading to India --
Leading global apparel manufacturers
Training on best practices.
\"The industry in this country is very young --
We are taking the first step, so everything will not go smoothly, \"said Banteyihun Gessesse, communications director.
\"Countries such as India have rich experience in this field.
However, it remains to be seen whether these obstacles can be overcome.
In Africa itself, it faces competition in textile manufacturing from countries such as Kenya, Mauritius and madagascar, but it has taken more positive actions to attract business opportunities.
By 2020, the government will spend $1 billion to build 15 industrial parks.
Two opened in July, and two more will be completed this year.
At the same time, the National Bank provides up to 60% of factory expansion costs for companies selling 70% products overseas, and 10-
Low annual tax exemption-interest loans.
Thanks to its hydro dam, Essey can also provide companies with lower power costs than most mainland rivals.
$0 for electricity. 06 per kilowatt
An hour in Ethiopia compared to $0.
In Kenya, for example.
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