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THE MARKET FOR LEATHER GARMENTS IN THE EU

Source: CBI Market Information Database • URL: www.cbi.eu • Contact: [email protected] • www.cbi.eu/disclaimer of 42

THE MARKET FOR LEATHER GARMENTS

IN THE EU

Publication date: March 2010

CONTENTS

REPORT SUMMARY ..................................................................................................... 2 INTRODUCTION.......................................................................................................... 4 1 CONSUMPTION..................................................................................................... 5 2 PRODUCTION ..................................................................................................... 13 3 TRADE CHANNELS FOR MARKET ENTRY .............................................................. 16 4 TRADE: IMPORTS AND EXPORTS ........................................................................ 21 5 PRICE DEVELOPMENTS....................................................................................... 27 6 MARKET ACCESS REQUIREMENTS....................................................................... 29 7 OPPORTUNITY OR THREAT? ............................................................................... 34 APPENDIX A PRODUCT CHARACTERISTICS............................................................ 36 APPENDIX B INTRODUCTION TO THE EU MARKET ................................................. 40 APPENDIX C LIST OF DEVELOPING COUNTRIES .................................................... 41

This survey was compiled for CBI by Fashion Research & Trends

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

http://www.cbi.eu/disclaimer



REPORT SUMMARY This survey profiles the EU market for leather garments for men and women. Market size • Total EU consumption of leather garments amounted to € 5.7 billion in 2008. Consumption

peaked in 2007 and was followed by a fall of 2.1% in 2008. • Italy is still the most important country in leather garments consumption in the EU.

However, the difference with Germany was very small. Four countries (Italy, Germany, UK and France) accounted for 67% of EU leather garments consumption.

• Consumers in Italy and Austria are the biggest spenders on leather garments in the EU, while per capita consumption in the new EU member states was far below the EU average of € 13.75.

• The leather garments market is not insulated from the international financial and economic crisis and the recession in several EU countries. In most of the EU countries (except in Poland and Romania) consumer spending on leather garments is forecasted to have fallen in 2009.

• Generally spoken, growth in volume of leather garments will be higher than growth in terms of value. Lower prices will be the result of increasing market shares of discounters, value chains and hypermarkets, but also of increased price competition and further expansion by specialized chains.

Production • According to Eurostat/Prodcom, turnover of the EU leather garments industry amounted to

€ 1.85 billion in 2008, which was 8% lower than in 2006. • Italy is the dominant leather garments producer in the EU accounting for 74% of total EU

turnover in 2008, followed by Spain and France. 92% of the EU leather garments industry is concentrated in these three countries.

• Most of the EU manufacturers have developed an outsourcing policy. Trade structure • Developments in the retail sector, such as a growing concentration at retail level, expansion

by internationalisation and heightened competition, lead to an increased demand for fashionable products against low prices.

• Growth of clothing multiple chains and franchised outlets and increased sales by non-specialized retailers (hypermarkets etc.) led to the decline of the formerly strong independents’ sector. This trend will be continued in the coming years.

• The role of importers/wholesalers remains relatively important but will decline slightly, while the role of clothing multiples and, to a lesser degree, buying groups or franchise formula, will increase in the coming years. Parallel to the trend for suppliers to make their clothing abroad is a trend for retailers or wholesalers to bypass the local industry totally, by means of direct imports.

Imports • The EU member states imported 43.9 thousand tonnes of leather garments with a value of

€ 1.6 billion in 2008. Imports fluctuated slightly during the period under review and showed the biggest growth in 2008 (+2.2%).

• Germany remained the leading importer with a share of 22% in imported value in 2008. Germany was followed by France (15%), Italy (12%), Spain and the UK (each country 9%). The Netherlands (7%) ranked 6th, followed by Belgium, Austria and Denmark.

• DCs play a dominating role in EU imports of leather garments. In terms of value, 61% of total imports came from these countries, against 64% in 2004.

• China remained the leading EU supplier, despite a fall of 25% during the period 2006-2008, just above runner-up India (+33% during the same period). These leading suppliers were



at distance followed by Pakistan, Turkey, Germany, Italy, France, Spain and The Netherlands.

Exports • The EU member states exported 15.9 thousand tonnes of leather garments with a value of

€ 1.1 billion in 2008, representing an annual increase in value of 3.6% in 2004-2008. • Export activities by EU countries vary strongly. The leading EU exporter of leather garments

was Italy (36% of total EU exported value), followed by Germany, France, Spain, The Netherlands, Denmark, Belgium and the UK.

• An increasing share of 33% went to countries outside the EU, mainly Switzerland (8% of total EU exports and 23% of non-EU exports), Russia, the USA, Japan, Hong Kong, Ukraine and Norway.

Opportunities for DCs exporters • The decrease of production in the major EU countries has led to a further sourcing of

products in low-cost countries, including products with a higher design content. Besides the traditional lower range market segment, the largest middle range market segment may also offer good opportunities for exporters in DCs.

• There is a tendency to use more leather looks made of man-made fibres, at the expense of genuine leather in particular in the mid and lower segments of the market. Caused by economic developments, many consumers on lower incomes will continue to seek low priced clothes.

• It should be noted that exporters in DCs will be faced with demands for high quality, reliability in deliveries and ethical aspects about manufacturing. Effective competition by DCs requires knowledge of the legal, technical, quality and fashion requirements. In addition, they must make resources available, not only to monitor and understand developments in the target countries, but also to ensure that quality requirements are strictly met.

• Production strategies for exporters in DCs can be concentrated either on increasing volumes, based on experience and trying to obtain a higher degree of efficiency in production, or on shifting production profiles and specialise in higher-value products. Both production strategies have to be combined with the recommendations mentioned earlier.

• A start, which involves limited risks and is chosen by the majority of exporters in DCs, is to try to acquire fixed orders for products specified by the client. The latter is at home in his market and knows all the “ins and outs” of his permanently changing market place. The most important determining factors for exporters operating on this basis are the combination of price, product quality and reliability of deliveries and delivery times. More further-reaching forms of potential co-operation are joint ventures and co-makership agreements



Introduction This CBI market survey profiles the market for leather garments in the EU. The emphasis of this survey lies on market developments, which are of importance to developing country suppliers. The role of, and opportunities for, developing countries (DCs) are highlighted. The broad definition of garments means that, in addition to this report, the CBI market surveys 'Knitted outerwear’, ‘Woven outerwear’, ‘Bodywear’ and ‘Personal Protective Equipment’ (including workwear) facilitate a complete view of all types of garments. Leather garments in this survey covers jackets and coats, besides other garments, like trousers, leggings, skirts, dresses, vests etc. However, in trade and production statistics, only one HS and one Prodcom code covers all leather-made apparel, which means that specifications by gender, type of leather and type of product are not possible. In general, it can be said that market information about leather garments is difficult to obtain. For that reason, analyses of leather garments consumption are based on interviews with experts in trade or production, analogue situations and available publications. For detailed information on leather garments, please consult appendix A. CBI market surveys covering the leather garments market in specific EU member states or documents on market access requirements can be downloaded from the CBI website. For information on how to make optimal use of the CBI market surveys and other CBI market information, please consult ‘From survey to success - Guidelines for exporting leather garments to the EU’. All information can be downloaded from http://www.cbi.eu/marketinfo, go to ‘Search CBI database’ and select your market sector and the EU. In this survey, Greece includes the Mediterranean island Cyprus. while Belgium includes neighbouring country Luxembourg, unless otherwise indicated. More information about the EU can be found in appendix B.

http://www.cbi.eu/marketinfo



1 Consumption 1.1 Market size The global market for leather garments can be estimated at almost € 18 billion in 2008, of which the EU accounted for 32%, North America (including the USA) 30%, Asia Pacific (including Japan) 27%, Latin America 5% and other regions 6%. Total EU consumption of leather garments amounted to € 5.7 billion in 2008. Consumption peaked in 2007 and was followed by a fall of 2.1% in 2008. An overview of consumer spending on leather garments in the EU by country is given in table 1.1. Italy is still the most important country in leather garments consumption in the EU. However, the difference with Germany was very small. Four countries (Italy, Germany, UK and France) accounted for 67% of EU leather garments consumption. Table 1.1 Consumption of leather garments in the EU, 2004-2010, in € million

2004 2006 2008 AAGR* 2004-08

Share in 2008

2010 forecasts

Italy 1013.4 1105.5 1086.2 +1.8% 19.0% 1045.0 Germany 1048.3 1028.1 1013.1 -0.8% 17.7% 1000.0 UK 910.3 915.8 897.6 -0.3% 15.7% 890.0 France 832.2 813.7 818.1 -0.4% 14.3% 815.0 Spain 472.6 483.5 467.8 -0.2% 8.2% 450.0 Netherlands 176.2 184.4 189.1 +1.8% 3.3% 185.0 Austria 144.8 148.4 149.4 +0.8% 2.6% 145.0 Belgium 153.4 148.9 147.1 -1.0% 2.6% 144.0 Sweden 129.5 135.8 139.2 +1.9% 2.4% 134.0 Greece 119.6 127.4 117.2 -0.3% 2.0% 117.0 Poland 90.7 100.7 115.6 +6.9% 2.0% 118.0 Portugal 90.4 99.8 91.7 +0.4% 1.6% 90.0 Denmark 74.5 87.3 87.6 +4.4% 1.5% 86.0 Finland 71.2 76.4 77.8 +2.3% 1.4% 77.0 Czech Republic 48.2 55.4 60.9 +6.6% 1.1% 58.0 Romania 39.0 46.2 56.5 +11.2% 1.0% 60.0 Ireland 48.5 49.0 47.4 -0.6% 0.8% 43.0 Slovakia 29.7 33.0 33.8 +3.5% 0.6% 33.0 Hungary 40.2 39.1 31.4 -5.5% 0.5% 30.0 Bulgaria 12.0 15.6 26.7 +30.6% 0.5% 26.0 Slovenia 14.6 15.8 17.0 +4.1% 0.3% 17.0 Lithuania 9.7 13.7 16.7 +18.0% 0.3% 15.0 Estonia 11.0 14.6 14.1 +7.0% 0.2% 13.0 Latvia 8.9 10.8 9.9 +2.8% 0.2% 9.0 Other (3) 18.5 19.4 19.7 +1.6% 0.3% 19.0 EU 5607.4 5768.3 5731.6 +0.6% 100.0% 5619.0

* Average annual growth Derived from several sources: Eurostat, Euromonitor and several national statistics Consumers in Italy and Austria are the biggest spenders on leather garments in the EU. Looking at the other EU countries, consumption per capita in Belgium was the highest, followed by Sweden and the UK. Spanish consumption was less than the EU average consumption of leather garments of € 13.75 in 2008. Per capita consumption in the ten EU member states, which joined the EU in 2004, was in the range of € 3.60 (Poland) to almost € 10.00 (Slovenia). The two most recent members of the EU, Romania and Bulgaria, accounted for € 4.15 and € 4.05 per capita.



There were significant differences between the rates of growth of different member states. For example, the highest growth rates were enjoyed by Bulgaria, Lithuania and Romania. Conversely, below average growth was experienced over the period by several of the major EU member states, especially in Germany and Belgium. Decreased EU consumption in 2008 can be ascribed to the following developments: • Since the economic crisis for many EU countries started in September 2008, consumer

expenditure on clothing, including leather garments, decreased considerably. As consumers continued being unsure about their future in terms of jobs and salary, their expenditure on clothes (including leather garments) was negatively affected.

• The role of luxury products, including leather garments with designer’s label, is decreasing. According to the trickle-down theory, influences of the catwalk performances remained strongly in place.

• Until 2007, young people showed a growing interest in leather garments. They considered leather as a natural product, which does not require excessive care and is a way to acquire prestige and personality. Caused by economic developments, however, the popularity of imitation leather or leather-looked garments increased strongly.

Positive developments in EU consumption of leather garments are: • In many EU countries the demand for traditional wear is declining in favour of casual and

leisurewear, including leather garments in a sporty and casual style. • Nowadays leather is highly fashionable and many famous designers put leather garments in

their collections on the catwalks of Milan, London or Paris. Forecasts Forecasts on consumer expenditure of leather garments amounted to € 5.6 billion for 2010, which would be 2.0% lower than in 2008. The leather garments market is not insulated from the international financial and economic crisis and the recession in several EU countries. In most of the EU countries (except in Poland and Romania) consumer spending on leather garments is forecasted to have fallen substantially in 2009 and recover partly in 2010, as mentioned in table 1.1 and discussed in the individual country surveys. Generally spoken, growth in volume of leather garments will be higher than growth in terms of value. Lower prices will be the result of increasing market shares of discounters, value chains, hypermarkets, but also of increased price competition and further expansion by specialized chains. In terms of future potential, it is clear that the new EU member states, in particular Slovakia, the Czech Republic, Slovenia and Poland, offer greater scope for market growth as incomes and spending patterns approach European norms, although this may still be some years away. These forecasts are based on historic data and, therefore, must be viewed as no more than an indication of a broad trend.

1.2 Market segmentation Criteria for market segmentation of leather garments are: • demographic factors, such as age children’s wear and adults, the latter often being divided

into age groups in several ways, for instance 15-24, 25-49, 50-64 and 65+) and gender (men and women);

• by type of product; • by type of activity resulting in specific clothing behaviour; • attitude of consumers towards fashion; • by product/quality ratio; • economic factors, such as income and spending power; • brand awareness and preferences; • climate and seasonal aspects.



Most of these criteria will be applied by trading partners in the EU. Socio-demographics The size and age structure of the population is one of the basic determinants of which products will be bought and how much will be spent on clothing. Although this may appear to be a rough method for categorising the market, it is interesting because: • Generally speaking, different age categories have different clothing behaviour, and • Developments within the various age categories can be followed, by comparing results with

projections. The EU population increased 1.5% in the period 2004-2008 to reach 494.1 million people. The EU has an ageing population and the category below 15 years has decreased. The categories 50 and older have increased substantially. In 2004, 34.4% of the total population was older than 50 compared to 35.4% in 2008. The population growth is expected to slow down in the EU. Another important demographic development is the strong increase of one- and two-person households. The persons in such households do not have many household or family obligations, so they have a lot of leisure time. Besides that, many of these households have rather high disposable incomes. Both factors are stimulating clothing consumption. Table 1.2 Population in the EU by age classes, 2004-2008 (in %) Age (years) 2004 2006 2008 0-14 16.3 15.9 15.7 15-24 12.8 12.7 12.5 25-49 36.5 36.5 36.4 50-64 18.0 18.2 18.4 65+ 16.4 16.7 17.0 Total 100.0 100.0 100.0

Source: Euromonitor (2009) Women’s leather garments were the leading sector in all individual EU markets surveyed. In 2008, the share of the total value of women’s leather garments sales in the major EU countries exceeded 50%. Women are considered to be more sensitive to fashion and buy more impulsively than men. In many EU countries, the demand for formal wear declined in favour of casual and leisurewear, which implies higher increasing sales in terms of volume rather than in terms of value. Leather clothing for children (2-14 years) mainly covers jackets, based on classical items for adults, like bomber jackets and motorbike jackets etc. Younger people are less interested in leather garments, because of the relative higher prices and the often low budget for clothing for this age group (students etc.). The age group 25-55 years is the largest group in absolute terms and in volume. They buy leather clothing in all price categories depending on several factors, while the group older than 55 years is mostly looking for better quality (cow and sheep) and attractive designs, made possible by a high disposable income. Segmentation by type of product A detailed breakdown of the different product types of leather garments is not available, as explained in appendix A of the CBI market survey ‘The market for leather garments in the EU’. Most of the items sold in the EU are jackets. The other products are coats, trousers, leggings, skirts, vests and dresses and, to a lesser degree shirts, shorts, underwear, bikinis etc. Leather garments can be divided into fashion products and/or functional products. Fashion products can be divided into three categories: 1. Classic fashion: mostly in traditional colours and models with slight variations. Low budget

products as well as expensive items are made in this category. Products like the bomber or flight jacket, the biker jacket etc. belong to this category.

2. Casual fashion: mass-bought fashion, especially worn by young people. 3. Highly individualistic fashion: trendy people following the latest developments in fashion. The use of materials and colours is dictated by fashion.



It has to be noted that changes in fashion are not so frequent in the leather garment sector as in the textile garment sector. Examples of functional products are specific products for motorcycle riders, like jackets, trousers and coveralls. These products are made from heavier leather quality (for example kangaroo leather) for protection against weather circumstances (cold, rain etc.) and accidents. In this sector, however, fashion influences are noticed too. Websites for more information about motorcycling wear are (among others) http://www.triumph.net and http://www.mqp.nl. Leather garments and other attributes are also popular with SM lovers, fetishists, certain homosexuals etc. One of the many websites is http://www.bizou.me.uk. There is a tendency to use more leather looks made of man-made fibres, at the expense of genuine leather in particular in the mid and lower segments of the market. Caused by economic developments, many consumers on lower incomes will continue to seek low priced clothes. Leather garments for motor cycling met competition from polyamide fibres, like Cordura, developed by DuPont. Segmentation by type of activity In general, the leather garments market can be divided into several segments, based on type of product combined with type of activity, resulting in a specific clothing behaviour such as formal, (smart) casual, leisure and active sports segments. Leather garments play a minor role in the largest segment of formal or classic wear. The increasing trend, away from formal wear (for daily use), favoured sales of casual and leisure wear. The role of leather garments in active sports segments is limited to motor cycling. Segmentation by attitude towards fashion Elements of fashion are: colour, design, kind of leather, exclusivity and style. The present consumer in Western Europe wants to be seen as an individual with his/her own life style. Especially in the higher priced fashion segment, leather garments have an individualising function. Therefore the demand by the consumer has become more specific. On the other side, value retailers and clothing discounters start or maintain their operating at a low-price level. This will be discussed in more detail below and in chapter 3 ‘Trade channels for market entry’ of this survey. Segmentation by price/quality ratio In terms of product quality, retail price level and related brands, the market for leather garments can be divided into four segments: the luxury segment, the middle segment often divided into an upper and a lower part, and a lower (cheap) segment. The trend towards looking for higher quality and more expensive products in the leather garments sector increased in the last decade. Forced by economic developments, the consumer became more price-conscious, but still looks for fashionable trends. The major purchase criteria as based on several segmentation criteria, like segmentation by product, attitude of the consumer towards fashion and by price/quality ratio. These criteria as well as the consequences for the store choices are given in the overview below. The low-to-middle price segment, with a market share of 40%, continues to dominate. This and more information about the retail and other distribution channels will be discussed in more detail in chapter 3 ‘Trade channels for market entry’. PRODUCT CRITERIA

STORE CHOICES

PRICE CRITERIA

High price luxury segment

Limited collections, made with special care; sometimes handmade, high quality materials

Designer stores Special departments in department stores Exclusive retail stores

Price is less, or not, important

http://www.triumph.net/

http://www.mqp.nl/

http://www.bizou.me.uk/



PRODUCT CRITERIA

STORE CHOICES

PRICE CRITERIA

Market share 5%

Designer/ brand name stands for exclusivity and fashionable clothes

Upper middle price segment Market share 15%

Extra attention to fitting and accessories Brand-name goods Good quality materials Broad range in design

Independent speciality shops Manufacturer’s direct stores Department stores

Acceptance of high prices for fashionable collections and consumer brands

Middle price segment Market share 20%

Good to medium quality materials Trend-following or classic assortment; brand-name goods

Independent speciality shops Department stores Home shopping companies

Price thresholds must be observed

Low to middle price segment Market share 40%

Produced in larger quantities to lower the price; Basic styles, less changes to patterns, basic fitting Medium quality materials/ lower fashionable elements Produced in large quantities to lower the price; less attention to fitting and patterns Basic quality/high fashionable

Clothing multiples Variety stores Clothing multiples Variety stores Value retailers

Price important Price important

Low or very low price segment Market share 20%

Basic or low quality Special sales/ offers Inexpensive products Produced in large quantities Very limited range in design

Discounters Hyper-markets Street markets

Special (low) prices

Source: Fashion & Vision (2009) The segments naturally overlap each other, but it is possible to identify the key characteristics, which distinguish them. More information about price levels and price structures will be discussed in chapters 3 and 5. Income and spending power Economic growth has slowed down across most of the EU countries, which can be characterized by the following developments in the EU: • Real GDP growth increased 2.4% in 2004, 3.2% in 2006 and 2.9% in 2007. Over the whole

year 2009, GDP decreased by 4.2% in the EU, compared with +0.8% for 2008. • Confidence indicators have revealed an improvement in economic growth, but only to the

extent that they suggest a slowing in the downturn; • Unemployment is rising steadily. The EU unemployment rate was 9.5% at the end of 2009

against 8.0% at the end of 2008; • Consumer price inflation was 2.3% in 2004, 2.2% in 2006 and 3.7% in 2008. The annual

rate of inflation in the EU was 1.0% in 2009; • EU consumer demand declined by 1.6% in 2009, despite higher real wage increases than

recently, because of near-zero inflation. Actual earnings will rise by much less, because of lower employment, short-time working and lower overtime or bonus payments.

There are significant differences in consumption habits in the varying EU countries, due to differences in culture, traditions and tastes. Clothing and footwear accounted for 5.3% of consumer expenditure in the EU in 2008, while this percentage was 5.9% in 2004. Consumer expenditure was higher on sectors like health, housing/energy, transport/communication and leisure/education activities. Brands In a world of change and insecurity, brands provide a basis for identity. Brands are important because:



• In the purchase decision, they give consumers confidence about the product that goes beyond pure quality assurance and project the image which relates to their life style.

• In Europe, the majority of consumers will pay more for a brand that they like and which fits their image and life style, which also will be underlined by advertising and marketing.

• Consumers do not distinguish between supplier and retailer brands. Either can reach the consumer with a branded proposition. Suppliers are opening their own stores (such as Nike, Levi’s, Mexx, Boss etc.); retailers are offering their own products (such as Zara, C&A, H&M etc.) and replace manufacturer brands with their own identities in the middle market, leaving the upper market to designer brands.

Examples of BRAND

NAMES FASHION CRITERIA Price range for

leather jackets/coats High price luxury segment Market share 5%

Dolce & Gabbana, Prada, Girbaud, Georgio Armani, Donna Karan, Versace, Gucci, Balmain, Loewe, Alberta Ferretti

High fashionable collections. Exclusively designed materials and artworks Trend-setting in fashion

€ 500 - € 1,000 or even higher

Upper middle price segment Market share 15%

Hugo Boss, Diesel, Timberland, Pall Mall, Marlboro Classics, Mc Gregor, Closed, Nivola, La Matta, Schott

Large variety of styles and of materials Styling and fitting are vitally important Product in line with the latest fashion trends

€ 250-600

Middle price segment Market share 30%

French Connection, In-wear, Benetton, S. Oliver, Esprit, Mexx , Jackpot, Arma, Dept, Summum, Easy Way

Good fitting is important Recognisable by brand-name visible on outside

€ 175-300

Low to middle price segment Market share 40%

Private labels, like C&A, Promod, WE, Marks & Spencer, Etam Private labels, like Hennes & Mauritz, Zara, Mango, Topshop, New Yorker

Collections with a view to current fashions High fashionable, close to trends

€ 75-200

Low or very low price segment Market share 10%

No brands

Standard products without particular fashion requirements

less than € 100

It has to be noted that many brand names cover the whole middle price segments, for instance with a price ranges of € 175-600 for leather jackets, like Transmission, Mancharey, DNA, Ofset, Futuro etc. The products in the lowest price category are mainly sold without a brand name, fancy brands or strongly discounted brand names. Climate and seasonal aspects Generally spoken, weather has an impact on the timing of expenditure, which tends to be highly seasonal. About 80% of leather garments is sold in autumn/winter while the remaining part in spring/summer covers relatively more suede and supple leathers. The assortment of leather clothing specialty stores (multiples and independent retailers) is limited in summer months. In the EU, there are two distinct seasons in which collections of most types of merchandise are sold, namely spring-summer (mainly indoor jackets, vests, skirts, shorts, etc. are sold) and autumn-winter (long coats, outdoor jackets, trousers and leggings are sold).



Fashion trends Recent performances on the international catwalks showed a revival of leather in autumn and winter season. More than any other colours, the traditional black and natural browns are positioned as a basis. The following trends in leather garments fashion for women are signalized: • Leather leggings and indoor jackets (blazers) with pagoda shoulders were the bestsellers in

the premium segment during autumn/winter 2009-10. This trend will be continued in autumn/winter 2010-11 also in the lower segments;

• Three main streams in fashion forecasts are announced: o leather garments collections will be more feminine. Refined silhouettes in supple

leathers will led to increased popularity in jackets, vets or gilets, skinny trousers and leggings.;

o sportive influences like glance leather combined with flat knit or glance nylon with long hairs;

o glamour-rock, covering black-coloured leather with a rather feminine punk, rocker and raver look. Including a whole host of garments, ranging from biker trousers to knee-length skirts and short above-the-knee dresses, with pride of place dedicated to endless variations on a biker jacket theme.

• Fur is used as decorative detailing in combination with leather, especially in the luxury segments, despite a strong longstanding opposition to using this precious material in countries like the UK and The Netherlands. For this and other (costs) reasons, artificial fur is used in the mid and lower segments of the market.

• Big zips are the latest form of decoration for jackets, dresses and skirts. • Skirts remain popular in all types and kind of lengths. The legging trend makes it possible

that skirts can be much shorter. • Washed leather. Trends in leather garments for men are less innovative. The classical fashion for men is mainly jackets, followed by lammies. Leather coats are mainly trench coats. Most popular leather types are washed (which gives leather a light-used effect) and waxed calf leather and nubuck. The main colour remains the black-anthracite range followed by the natural browns. These are followed at distance by colours like indigo and orange, which are used for suede jackets, and leather jackets in the colours green, blue and dark red. The worldwide trend to more ‘sports and casual wear’ has affected the leather garments segment, in particular for men, to variations on the traditional bomber and biker jackets. Bombers or other flight jackets made of various kinds of leather are used in the cold winter months. The protective function is much less for suede jackets. These can be worn during several seasons. During the former century, biker jackets were mainly used for motor cycling, but some types of these jackets were also worn as casual wear. In recent years, the biker jacket became a key casual jacket. Caused by designers, like for example Jean Paul Gaultier, many variations were made on this jacket. Modern variations cover burnished blacks, classic black and maroon glacé browns completed with biker-style zip trims. The jackets are used the whole year for their original function and for casual wear three seasons. Children’s fashion was oriented on the “adult look” during recent years and can be described as ‘tough’. There was space in this trend for a material like leather combined with (artificial) fur, mainly in jackets and coats. For current but less detailed fashion information, we refer to the CBI fashion forecasts. Suppliers in DCs should follow the trends, expressed by designers on international catwalks, and incorporate certain elements in their sample collection. Current and more detailed information on materials, colours and styles can be found in a broad range of magazines (see chapter 2 of this survey).



General trends • In most of the major EU countries, people have become larger in length and width, which is

valid for men and women, as well as in the younger age groups. • Media such as Internet, (fashion) magazines and TV inspires inspire people to follow fashion

trends. • Decreasing brand loyalty, caused by efforts to lower the costs, among consumers have led

to a combination of high-priced luxury product with a cheap private label product. • Increasing individualisation; consumers are more difficult to control and also less

predictable. The trends are changing at a greater speed and this makes segmentation of the market difficult. However, mass fashion will still exist within different subcultures.

1.4 Opportunities and threats

The same development or trend can be an opportunity for one exporter and a threat to

another. Exporters should therefore analyse if the developments and trends discussed in this survey provide opportunities or threats. The outcome of this analysis depends on each exporter’s specific circumstances.

+ Expectations for consumer expenditure on leather garments for the period 2010-2011 are moderately optimistic in the major EU countries: o the number of garments purchased per capita will continue to rise but prices will not

follow this growth rate; o continuing interest in more fashionable leather garments, especially for women.

+ Experts forecast that leather garments expenditure in several of the new EU member states will continue to grow in the period 2010-2011: o boosted by the entry of more foreign, particularly European, formula (or fascia) into the

market, consumers will become more aspiring and follow fashion trends from Western Europe as prosperity increases and foreign investment in the country grows;

o popularity of second-hand clothing declined in favour of buying clothing at hypermarkets, clothing multiples and from home-shopping companies.

± Caused by economic developments, many consumers on lower incomes will continue to seek low-priced clothes. On the other hand, the size of the market and the polarisation in incomes offer huge markets for quality and convenience, designer labels, (global) brands etc.

± It should be noted that exporters in DCs will be faced with demands for high quality, ethical requirements and environmentally friendly products.

1.5 Useful sources • Euromonitor publications - http://www.euromonitor.com • Several articles about women’s fashion at

http://www.fashion.about.com/cs/tipsadvice/a/allaboutfit • EU information about textiles and clothing industry

http://ec.europa.eu/enterprise/sectors/textiles/index_en.htm

http://www.euromonitor.com/

http://www.fashion.about.com/cs/tipsadvice/a/allaboutfit




2 Production 2.1 Size of production According to Eurostat/Prodcom, the turnover of the EU leather garments industry amounted to € 1,851 million in 2008, which was 8% lower than in 2006. Italy is the dominant leather garments producer in the EU accounting for 74% of total EU turnover in 2008, followed by Spain and France. 92% of the EU leather garments industry is concentrated in these three countries. Table 2.1 Leather garments production in the EU countries, 2004-2008 in € million

2004 2006 2008

AAGR* Share 2008

Italy 1770.1 1508.6 1377.5 -5.5% 74.4% Spain 237.3 208.8 190.4 -4.9% 10.3% France 152.5 133.9 130.6 -3.6% 7.1% Romania 31.9 31.1 30.6 -1.0% 1.6% Germany 18.9 15.9 19.1 0.3% 1.0% Poland 17.9 19.2 18.9 1.4% 1.0% UK 15.4 16.5 15.3 -0.2% 0.8% Austria 14.1 13.2 12.2 -3.4% 0.7% Czech Republic 15.4 10.6 9.6 -9.4% 0.5% Denmark 7.9 7.2 6.9 -3.2% 0.4% Portugal 9.1 8.2 6.7 -6.6% 0.4% Finland 6.5 5.8 5.6 -3.5% 0.3% Slovenia 6.2 5.5 5.0 -4.8% 0.3% Greece 6.7 5.1 4.9 -6.7% 0.3% Slovakia 4.5 4.3 4.0 -2.8% 0.2% Hungary 9.2 7.0 3.9 -14.4% 0.2% Bulgaria 4.0 3.1 2.3 -10.6% 0.1% Belgium 2.6 2.0 0.0 -25.0% 0.0% Baltic countries (3) 2.7 2.8 3.6 8.3% 0.2% Other countries (4) 10.1 7.3 4.7 -12.6% 0.3% EU 2343.0 2016.1 1851.8 -5.2% 100.0%

* Average annual growth Source: Eurostat/Prodcom (2009), partly revised Clothing manufacturers in the EU can be divided into: • Manufacturers which have access to the end consumer through using own retail structures

(vertically integrated companies), • Manufacturers which are developing own design/brands, and • Manufacturers which are working only or partially as subcontractors (mostly on

cut/make/trim or CMT basis). Most EU manufacturers have developed an outsourcing policy which may include: • Small, rush-orders in their own factory using modern technologies to guarantee speed and

flexibility; • Specialist products and products with a reasonable profit margin are subcontracted at short

distance; • Series of bulk products are sub-contracted in low-wage countries. The restructuring policy of many manufacturing companies in the EU during the last two decades led to relocation of the clothing production, based mainly on labour cost comparisons. However, even though cost may play an important role in defining the ideal location, it is only one of the elements to take into account. For example: a well-organised, highly productive factory in country A can offer better prices than a poorly organised, low-efficient factory in country B, despite lower labour costs in country B.



The foreign policy of clothing manufacturing companies takes many forms: • Most of the largest companies have established their own factories abroad or entered into

joint ventures in low-cost countries. • Besides these forms of ownership structure, subcontracting forms an important part of the

activities of the EU clothing industry. It is possible to identify three basic concepts of subcontracting: Outward Processing Trade (OPT), Cut, Make and Trim (CMT) and Free on Board (FOB).

• Another possibility for manufacturing companies is sourcing abroad, mainly for additional products to their own product range.

Under OPT, the most labour-intensive piecework such as sewing and packing has been relocated. Due to the entrance of many CEECs into the EU, OPT was therefore no longer necessarily statistically recorded as such. At the same time, the policy of EU manufacturers has changed to other ways of delocalisation, like CMT and FOB. OPT in leather garments decreased considerably from € 4.6 million in 2004 to € 3.3 million in 2006 and reached € 2.3 million in 2008, only 0.2% of EU leather garments imports from outside the EU. The most important OPT country became Vietnam, followed by Pakistan, Hong Kong, Ukraine and India. CMT indicates a further step in the relocation. Under CMT, the entire manual production is relocated, although the material purchase is held on to for efficiency and quality reasons. The quality control is relocated, too, and is typically managed by travelling controllers. The next step in relocation is often called FOB. Under FOB, suppliers abroad receive complete specifications for the design, quality of the fabric, accessories and other materials etc. Subsequently, the suppliers manage the purchase of the materials themselves. This form is most usual for importers/wholesalers and importing retail organisations, but only for a minority of the manufacturing companies. This often concerns additional products (accessories) or basic products, to complete a manufacturer’s product range. The relocation policy of EU manufacturers gives them the possibility to maintain control over the management and quality of the outsourcing operations and to respond quickly to changing market demands. When products from foreign production, subcontracting and sourcing are imported, this occurs under a regime of direct imports which are subject to trade restrictions. The garments produced under OPT restrictions are re-imported exempted from all quotas and tariffs for imports into the EU for the countries in question. 2.2 Trends in production

• Forecasts for domestic leather garments production in the EU remained depressed. Most

member states registered a decrease in production. The activity of the EU leather garments sector will decrease furthermore due to the growing penetration rate of Asian imports, the exchange rate of the euro, which is unfavourable to EU exporters and economic developments.

• Price competition among suppliers has intensified, resulting in a slow growth in production prices. This is causing concern among EU producers, who are finding it increasingly difficult to match low import prices.

• Increasing internationalisation by EU manufacturing and/or retail companies expanding their activities intensively, making their products available in many European countries and even outside Europe.

• High degree of vertical integration in the value chain; several producers opened their own chain(s) and many suppliers started a close and long-term co-operation with distribution channels, which increases the entry barriers for new suppliers.

• Increasing concentration; the number of suppliers decreased and many suppliers have merged or have taken over other suppliers.

2.3 Opportunities and threats



+ The further sourcing of products in low-cost countries has led to the substantial decrease in

production in the major EU countries, including products with higher design content. Besides the traditional lower range market segment, the largest middle range market segment may also offer good opportunities for exporters in DCs.

+ Importers in the major EU countries have built up a comparative advantage by specialising themselves in design and other functions, like preparation of samples, logistics, marketing etc., while simple production operations take place increasingly in other countries. As time goes by, even the first-mentioned functions are leaving these EU countries too.

+ Advantages of the new EU states in terms of lower wages and shorter routes will largely be eroded, due to the alignment of the wage structure and the fact that the clothing industry there will no longer be competitive.

± To satisfy the requirements of importing companies in the EU, exporters in DCs will be faced with increased demands for higher quality and requirements concerning environment and sociability.

Useful sources • Names and websites of interesting players in the leather garments sector are given in the

individual country surveys; • General websites are Euratex (http://www.euratex.org) including links to national trade

associations; • EU information about clothing and textiles industry

(http://ec.europa.eu/enterprise/sectors/textiles/index_en.htm); • Trade press. The trade press can be divided into four categories:

International fashion magazines specialised in leather mainly for designers These magazines give an overview of the world’s leading fashion shows, forecasting of

colours, fabrics, designs etc. The main purpose is to gather information and obtain inspiration, in particular by designers. Frequently used are magazines like Ars Arpel, Vogue Pelle and Mode Cuir.

International fashion magazines for design, styling and forecasting departments These magazines are specialised in outerwear and sometimes include leather garments, but

give information about general trends, colours etc. Major magazines are: Prêt-à-Porter Collections (women’s wear), Men’s Collections (men’s wear), Donna Collezioni (http://www.logos.info) and from the same publisher: Uomo Collezioni, International Textiles, Textile View Magazine and Sportswear International.

Magazines with information about production and trade in leather garments Business and marketing analyses of the world's leather garments industry and trade are given

in ‘World leather’ a global monthly magazine that covers the entire spectrum of the leather and tanning industry and ‘World Sports Activewear’ a global magazine for sports and active outdoor wear that covers the performance of active wear and equipment and the creation of fabrics and materials, all from the same publisher.

Magazines with information about production and trade in clothing including leather

garments Business and marketing analyses of the world's textile and apparel industry and trade are

given in Textile Outlook International (http://www.textilesintelligence.com). The most important trade magazines in Germany is Textil Wirtschaft (http://www.twnetwork.de), weekly magazines in the German language and in France Journal du Textile (http://www.journaldutextile.com/intro_en.htm), weekly magazines in the French language These and other magazines will be discussed in the individual country surveys.

http://www.euratex.org/


http://www.logos.info/

http://www.textilesintelligence.com/

http://www.twnetwork.de/

http://www.journaldutextile.com/intro_en.htm



3 Trade channels for market entry 3.1 Trade channels Figure 3.1 shows the basic trade channels (exporting manufacturers and traders, agents, importing manufacturers, wholesalers and retailers). Depending on its position in the market, the functions of a particular channel will be linked with up- or downstream channels with the same kind of specialisation. It is also possible for a given channel to take over (some of) the functions of the latter, in order to improve competitiveness (vertical integration). For instance, manufacturers, agents and retailers may also function as importers, while wholesalers may also be manufacturers (vertical integration). Each of these groups has a different approach to business and the market, with its own specific interpretation of the marketing mix. Theoretically, importing is a function which can be done by manufacturers, wholesalers or retailers as given in figure 3.1. However, in some countries and/or branches a distinction is made between importing wholesalers and importers. In that case, the importer purchases at his own risk, handles Customs clearance and sells mainly to retail organisations, like multiples, department stores and buying organisations and other wholesalers, while wholesalers purchase at own risk from local or EU manufacturers and from importers. Figure 3.1 Trade and distribution channels for leather garments in the EU Exporting manufacturers Importing wholesalers Importing manufacturers Agents I m p o r t i n g r e t a i l e r s

Department Clothing Home Selling and/or Other and variety multiples shopping buying retailers stores companies organisations

Non-importing retailers

Importing manufacturers: Many EU leather garment manufacturers are also importers; they cannot themselves produce all the garments in the quality and price ranges required by the consumer market, owing to limited production possibilities and high costs. The many forms of production strategies of EU manufacturers are discussed in chapter 2 of this survey. Clothing manufacturers penetrate the retail business by operating through own shops or through franchising. This gives them control over their output and margins. Importing wholesalers: Wholesalers can be specialised in leather garments or combine leather garments with other product groups, mainly outdoor clothing. The wholesaler purchases from manufacturers and holds stocks at his own risk. By buying on his own account, the importer/wholesaler takes title to the goods and is responsible for their further sale and distribution in his country and/or in



other EU markets. He is familiar with local markets and can supply considerable information and guidance to the exporter, in addition to the primary business of buying and selling, such as administration of import/export procedures and holding of stock. The development of a successful working relationship between exporting manufacturers in DCs and an importing/wholesaler or importer can lead to a high level of co-operation, with regard to appropriate designs for the market, new trends, use of materials and quality requirements. The mark-up of a wholesaler is approximately 20-40%. The fact that many independent retailers, as well as purchasing combinations and multiple stores, are becoming more cautious about pre-ordering, preferring to sell from stock, is reinforcing the position of the wholesaler. On the other side, large retail companies are increasingly purchasing abroad, thereby passing the intermediaries. In the case of importers, the mark-up is approximately 40-50%, which covers a range of activities, such as design, stock-forming, distribution, marketing etc. as mentioned above. Agents The sales or selling agent is an independent intermediary between the (foreign) manufacturer and the retailer or retail organisation, receiving a commission from the former. The agent (or sales representative) covers a limited geographical area. The level of the commission depends on a number of factors, including the turnover rate of the product concerned, but it averages an estimated 8-12% of turnover. Most agents represent more than one manufacturer, although competition is avoided. More and more agents are starting to sell from stock, to meet their clients' short-term demands. Stock forming is often on a consignment basis. Capital requirements are limited, because this cooperation is based upon commission; however, agents mainly work with brand names and are therefore less interesting for most exporters in DCs. Another type of agency is the so-called buying agent. The buying agent is located in the supplying country and settles business on the instructions of his principals, which are mainly retail organisations, and works on commission basis, too. Retail trade Retailers constitute the final stage before products reach the consumer. In this survey and in the surveys covering individual countries, a distinction is made between specialised retailers (independent (clothing specialty) retailers and clothing multiple stores) and non-specialised retailers, like department and /or variety stores, textile supermarkets or discount stores, value retailers, home shopping companies, hypermarkets, street markets, wholesalers (selling to consumers), factory outlets etc. A detailed overview of the retail structure and market shares of retailers with clothing in their assortment are discussed in the surveys on specific EU countries. Distribution channels differ greatly across the EU member states. Some characteristics are: • The UK has a high concentration of distribution, which is reflected in the relatively low

market share of independent retailers. • The southern and eastern EU member states have high market shares for independent

retailers. These retailers buy mainly from manufacturers and wholesalers/importers. • In Germany, The Netherlands and Scandinavian countries, many independent retailers are

members of buying co-operations. • In southern and eastern EU countries, franchise formula are more popular. Unorganised independent retailers, which have decreasing but still important market shares in most of the EU countries, buy directly from local or near-by manufacturers or agents representing these manufacturers, as well as from wholesalers/importers. These retailers do not import by themselves and are therefore not interesting for developing country exporters. Franchise or selling formula and buying groups can be considered as multiple stores or chains, including their buying policy. The original function of the buying groups was reduction in costs



by centralising of buying and logistics. More and more selling formula for the members have been developed and the successful ones have been exploited as franchising activities. The website of the European Association of National Organisations of textile retailers (AEDT): http://www.aedt.org gives information about independent retailers and links to national organisations. Some characteristic concerning the buying policy of importing retail organisations are: • The bigger retail organisations (multiples with more than 20 outlets, department and

variety stores, buying organisations, home shopping companies) import through their own buyers. Most of these organisations have mainly or exclusively private labels in their assortment and divide their budgets between the purchase of finished products via direct imports (sourcing ready-made products) from low-wage countries and sourcing products made according to their own design.

• Home shopping companies are keener than other retail distributors about the re-order facility. They will want to start with small orders to test the market and make a firm, but not final, bulk commitment a few months later. If an item sells, they expect subsequent supply of maybe three times that number at short notice, simply because the catalogue cannot on any account disappoint the customer by saying ‘sold out’.

• Many major retail organisations use buying agents or set up their own buying organisations in low labour-cost countries. This means that retailers are able to bypass domestic wholesalers and/or manufacturers and can reduce costs.

• Hypermarket chains, value retailers, textile and other discounters operate mainly at the lower end of the market, so the lowest purchasing prices are the main buying criteria.

• Generally spoken, clothing multiples are interested in more criteria than price, like service by the producer, technological capacity, quick response etc.

Trends in retail trade • A high degree of integration in the value chain: more and more manufacturers open their

own (international) brand stores. • The EU market has witnessed the relentless growth of clothing multiple chains and

franchised outlets, leading to the decline of the formerly strong independents’ sector. This trend will be continued in the coming years.

• The hypermarket format, with its strong non-food component and international character, plays an increasingly important role in outerwear and leather garments sales in Western as well as in Eastern EU countries.

• Most of the retail chains have expanded their foreign activities; some of them even operate globally. The main examples are Hennes & Mauritz (Sweden; http://hm.com), Inditex (Spain; http://www.inditex.com) and C&A (Netherlands/Germany; http://www.c- and-a.com).

• Tough market conditions have favoured those retailers who can respond to consumer demand more quickly and at lower cost. A handful of specialty retailers, such as H&M and Zara, continued to defy the global economic downturn. These companies are particularly adept at understanding what consumers buy - and want to buy - in real time and responding quickly to sales trends and customer feedback.

• The strategies, mentioned above, have consequences for manufacturers, through the concentration in buying activities. The powerful groups of chains tend to reduce their number of supplying manufacturers in general; have a stronger position in negotiations about price, delivery conditions etc. and in some cases organisations take over the functions of suppliers, in order to improve competitiveness (vertical integration). The increasing integration in the value chain decreases the number of suppliers on the market and forces them into a close and long-term cooperation with the distribution channels. Mergers and take-overs in clothing production in many EU countries should therefore be seen against the background of grasping more market power, as well as a strong position compared to the retail organisations.

• Margins are under continuous pressure in the major EU countries. Consumer expectations with regard to lower prices, in particular, as well as tough competition, have resulted in the retailer’s needs for lower inventories, less out of stock and lower markdowns. The

http://www.aedt.org/

http://hm.com/

http://www.inditex.com/

http://www.c-and-a.com/

http://www.c-and-a.com/



consequences for the buying policy are fewer pre-seasonal orders; more collections per season; investment in seasonal planning and control; co-operation with suppliers (quick response/EDI), and fewer suppliers.

• Minimising purchasing costs implies that many buyers try to limit the number of supplying countries and the number of individual manufacturers with which they deal.

• Sourcing policies are made on two levels, country level and company level. On country level aspects like duty rates, ethical aspects, wage structure, distance, local infrastructure, economic and political stability play a role. Other aspects like fast reaction, speed to market, logistics management, quality, production facilities, design capacity, availability of materials, are not country-specific, but can vary considerably within individual countries.

More specified information concerning distribution in the EU countries is given in the CBI surveys covering individual countries. 3.2 Price structure The margins at the various different levels of distribution are influenced by several factors like degree of risk; volume of business; functions or marketing services rendered; competition and exclusiveness; and are different for each product/market combination. It is impossible to draw up a schedule of actual margins for each and every product/market combination. Even within the same type of combination, different importers apply different margins, due to variation in economic conditions. The various retailing stores differ in the sales formula they apply, i.e. their assortment and the consumer group targeted, as well as in the way they differentiate themselves from competitors. As an aid to understanding the market, one can discriminate between "service retailing", where the retailer offers the consumer substantial added value (quality, service, fashionability, choice etc.), and "low-margin retailing", where the price-conscious consumer is offered low prices, at the expense of quality, service and so forth. We refer to the overview in chapter 1.2 for the various segments in the outerwear market. The effect of low, medium and high margins on consumer end price, based on one CFR (cost and freight) price for three different products, will be shown in table 3.1. This shows that a multiplier of between 2.4 and 4.3 on the manufacturer’s price should be used to calculate an appropriate final consumer price. Caused by factors like increasing competition at all levels in the distribution column, further concentration and integration, the factor has decreased in the last decade. Elimination of the wholesaler, for instance, can lead to a lower multiplier used by clothing multiples, department and variety stores and mail-order companies. Table 3.1 Calculation schedule: margins Low Medium High CFR Rotterdam/Amsterdam 100 100 100 Import duties * * * Charges on CFR basis: - handling charges, transport insurance, banking services 7 7 7 107 107 107 Importers/wholesalers’ margin (20/30/40%) 21 32 43 128 139 150 Retailers’ margin (60/100/140%) 77 139 210 - net selling price 205 278 360 Value Added Tax: 19% of net selling price **) 39 53 68 - gross selling or consumer price 244 331 428 RATIO CIF/CONSUMER PRICE: 2.4 3.3 4.3 *) import tariffs vary from 0 up to 12.0% of CFR value **) In this calculation, the VAT tariff valid for The Netherlands is used, but note that this tariff varies

per EU country (see the individual country surveys). The average outerwear retailer marks goods up by 80-110% of his buying price, with selected goods retailing up to 165% higher than buying prices. However, a large part of the assortment will have been reduced in price.



Although levels of wholesaler and retailer costs often shock suppliers, these intermediaries do not generate excessive profits. While purchase costs have fallen since manufacturing in low cost countries started to gather pace, other costs have risen and increasing competitive pressures have kept profitability down. Bargain sales are growing in importance in all segments of the clothing market and in all major EU countries. Bargain sales generally threaten margins but are considered as inevitable, because of the growing dynamics of the clothing market. Rapidly changing fashion quickly makes clothing assortments "out-fashioned". Bargain sales are then the only means to recover a part of the purchase price, even if garments are sold below the usual retail price. Opportunities and threats Opportunities for exporters in DCs when choosing their distribution channels, depends on external (demand and requirements of importers/buyers) and internal factors. The latter is discussed in CBI’s survey ‘From survey to success - Guidelines for exporting leather garments to the EU’. The foreign strategies of EU manufacturers are discussed in chapter 2. + For starting and/or SME exporters, selling to wholesalers and importers has the most

advantages. Disadvantages are the missing of direct contacts with retail organisations and the lower margins.

± Importers in the major EU countries have built up a comparative advantage by specialising themselves in design and other functions, like preparation of samples, logistics, marketing etc., while simple production operations take place increasingly in other countries. As time goes by, even the first-mentioned functions are leaving these EU countries too.

+ As mentioned above, exporters of leather garments are confronted with many aspects like quality, sizing, packaging, environmental aspects, resulting in a lot of technical requirements, added to which are aspects of design, fashionability, market developments etc. For that reason, co-operation in a variety of forms between importer and exporter can be necessary, of which the more further-reaching forms of potential co-operation are joint ventures and co-makership agreements.

± The EU apparel market is complex and sophisticated. The movement away from cheap products (with low relation to fashion and comfort) to mid-price segments, including products of higher quality and more individual clothes, offer interesting opportunities to exporters. In this segment, European as well as foreign retailers operate with their own private labels, sometimes combined with branded products (for an increasing part sourced outside the EU) as well as with non-branded or fancy branded items.

3.3 Useful sources • European Association of National Organisations of textile retailers (AEDT):

http://www.aedt.org • Contacts with sales intermediaries can be made in several ways, such as consulting trade

representatives’ associations, chambers of commerce, fashion centres, trade publications, trade directories etc. In this survey and in the surveys on specific EU countries, websites of potential trading partners are mentioned and otherwise websites of associations including links to their members (manufacturers, wholesalers or retailers), lists of exhibitors at trade fairs etc.

http://www.aedt.org/



4 Trade: imports and exports Trade statistics in this chapter are taken from Eurostat. Eurostat bases its statistics on information from the Customs and EU companies, the latter being given on a voluntary basis. Not all transactions are registered, particularly intra-EU trade such as those by smaller countries and transactions from non-EU sources. Consequently intra-EU trade tends to be understated. On the other hand, figures for trade between the EU and the rest of the world (extra-EU) are accurately registered, and therefore more precisely presented in these statistics. Nevertheless they must be treated with extreme caution and are only intended to give an indication of trade flows in the international leather garments market. 4.1 Total EU imports The EU member states imported 43.9 thousand tonnes of leather garments with a value of € 1.6 billion in 2008. Imports fluctuated slightly during the period under review and showed the biggest growth compared to the previous year in 2008 (+2.2%). DCs play a dominating role in EU imports of leather garments. In terms of value, 61% of total imports came from these countries. An analysis of imported leather garments, such as by actual types of product, materials used and whether the garments are for men or women, is not possible, because only one statistical number is available for leather garments. Total imports of leather garments increased until 2008, while production for the EU market decreased, which indicates growth of the import share in the slightly increasing consumer market. Table 4.1 EU imports of leather garments 2004-2008, in € million/1,000 tonnes 2004 2006 2008 AAGR* in value €

million 1,000

tonnes €

million 1,000

tonnes €

million 1,000

tonnes 2004-08 2007-08

Total EU, 1,563 47.2 1,549 45.5 1,609 43.9 +0.7% +2.2% of which from: Intra-EU 514 11.9 536 11.4 568 13.2 +2.6% -3.4% Extra-EU ** 47 0.9 43 0.5 58 0.8 +2.7% +1.9% DCs 1,002 34.4 970 33.6 983 29.9 -0.5% +5.1%

* Average annual growth ** excluding DCs Source: Eurostat (2009) Developments in imports of leather garments vary strongly per EU country. This depends on several factors like size and structure of domestic production of leather garments, the opportunities for and volume of re-exports, developments in demand as described in Chapter 1. German imports of leather garments were 8.2% higher in 2008 than in 2006 but were still under the level of 2004. Germany remained the leading importer with a share of 22% in imported value in 2008. Germany was followed by France (15%), Italy (12%), Spain (9%) and the UK (9%). The Netherlands (7%) ranked sixth, followed by Belgium (5%), Austria (4%) and Denmark (4%). Based on preliminary Eurostat figures, imported value of leather garments decreased by 11.2% during the period January-November 2009 compared to the same period in 2008. East European countries (the Baltic countries, Bulgaria, the Czech Republic, Hungary and Poland), the Nordic countries (Denmark, Finland and Sweden), Greece and Ireland showed the biggest falls varying from 20-48%.



Table 4.2 EU imports of leather garments, 2004-2008, in volume and in value 2004 2006 2008 AAGR* in value €

million 1,000

tonnes €

million 1,000

tonnes €

million 1,000

tonnes 2004-08 2007-08

Total EU 1,563.2 47.2 1,549.1 45.5 1,608.5 43.9 0.7% 2.2% Germany 359.2 11.6 326.7 9.8 353.4 9.2 -0,4% 2.2 France 193.4 4.7 214.0 5.3 238.2 4.7 5.8% 16.3 Italy 180.6 4.0 186.7 4.0 192.1 4.0 1.6% -1.5 Spain 170.3 4.2 154.3 4.3 150.9 4.0 -2.9 -2.9 UK 162.4 5.9 145.3 4.9 141.9 3.8 -3.2 -7.8 Netherlands 83.3 3.0 98.3 3.5 104.8 4.1 6.4 -5.5 Belgium 83.7 2.5 84.2 2.7 87.1 2.6 1.0 7.7 Austria 70.0 1.3 73.9 1.4 65.0 1.1 -1.8 -3.1 Denmark 32.1 1.2 54.4 2.2 57.5 1.9 19.8 17.6 Greece 67.9 2.1 44.8 1.2 33.1 2.1 -12.8 -17.0 Sweden 32.9 1.1 36.4 1.1 31.9 0.9 -0.8 -6.2 Poland 7.8 0.2 15.8 0.5 27.8 0.8 63.9 29.7 Portugal 29.6 0.7 22.5 0.5 23.8 0.6 -4.9 -7.1 Czech Rep. 22.2 0.8 19.2 0.6 21.0 0.5 -1.3 27.8 Finland 13.5 0.4 16.5 0.5 16.2 0.5 5.0 7.8 Slovakia 10.4 1.4 8.9 1.1 10.4 1.3 -0.1 34.2 Romania 4.3 0.4 7.4 0.6 10.1 0.7 33.1 10.4 Bulgaria 1.6 0.2 1.8 0.1 7.9 0.2 96.5 13.9 Hungary 8.6 0.8 8.8 0.4 7.4 0.3 -3.6 -2.2 Ireland 7.9 0.2 6.8 0.2 6.4 0.2 -4.8 7.8 Lithuania 3.3 0.1 4.7 0.2 5.3 0.1 15.8 7.8 Slovenia 4.9 0.1 3.3 0.1 5.0 0.1 0.8 52.0 Estonia 3.7 0.1 4.9 0.2 3.4 0.1 -1.5 -25.1 Luxembourg 4.3 0.0 3.7 0.0 3.4 0.0 -5.0 4.3 Latvia 3.0 0.1 3.8 0.1 3.1 0.1 0.8 -22.0 Cyprus 2.1 0.1 1.8 0.0 1.2 0.0 -11.0 7.6 Malta 0.2 0.0 0.2 0.0 0.2 0.0 -5.5 -16.0

* Average annual growth Source: Eurostat (2009)

4.2 Important supplying countries 74% of EU imported value of leather garments came from six countries (China, India, Pakistan, Turkey, Germany and Italy) in 2008. China remained the leading EU supplier despite a fall of 25% during the period 2006-2008, just above runner-up India (+33% during the same period). Imports from Pakistan (+29%), Turkey (+3%), Germany (+16%) and Italy (+8%) increased, too. These countries were at distance followed by France, Spain, The Netherlands, Switzerland, Denmark and Belgium. Table 4.3 EU imports and leading suppliers of leather garments 2004-2008,

share in % of value 2004 2006 2008 € million € million € million

Leading suppliers in 2008 (share in % of total imports)

Share (%)

Total 1,563 1,549 1,609 100 Intra-EU: 514 536 568 Germany (8), Italy (8), France (4), Spain

(3), Netherlands (3), Denmark (2), Belgium (2), UK (1), Austria (1), Sweden (1), Romania (1).

36

Extra-EU ex. DCs *):

47 43 58 Switzerland (2), Hong Kong (1), USA (<1), UA Emirates (<1), South Korea (<1).

3

DCs: 1,002 970 983 China (19), India (18), Pakistan (11), Turkey (10), Ukraine (1), Morocco (1), Vietnam (1), Croatia (<1), Sri Lanka (<1), Bosnia & Herzegovina (<1).

61

*) Developing countries Source: Eurostat (2009)



With regard to factors like cost levels and distances, the following competitive categories in leather garments can be distinguished: Low-cost, long-distance countries: these countries specialise in low-priced, high-volume, low and medium fashion and standard types of products with a fair quality. These products are mainly made to buyers' specifications in countries in the Far East (China) and South East Asia (Pakistan, Vietnam, Sri Lanka and Thailand). Average import price (in terms of weight) from China were around 67% of the average EU import price, against Pakistan (71%) and Vietnam (78%). Average import price from India, however, are 13% higher than the EU average, which could indicate that exports by India had higher design contents than imports from other Asian countries. Low-cost, medium-distance countries: these countries supply medium fashion products, like Ukraine and the Czech Republic. Medium-cost, medium-distance countries: these countries supply medium to high fashion products of high quality and sometimes made of high quality leather: like Turkey, Morocco, Croatia and EU countries (Romania and Poland). High-cost countries: these countries supply quality fashion characterized by frequent deliveries, small quantities and sophisticated materials, which are difficult to obtain in low-cost countries. Western Europe (Italy, France, Austria and UK), Japan and USA belong to this category. Average import prices of leather garments from China increased by 17% during the period 2006-2008. This growth was (among others) caused by increasing wage costs and mounting costs caused by changes of the law based on social and ecological standards. Import prices from other Asian countries mentioned stabilized or grew slightly. 4.3 The role of DCs Total EU imports from DCs decreased in terms of volume (almost 9%) and value (0.5%) in the period 2004-2008, which indicates that average import prices were 11% higher in 2008 than in 2004. During the period 2004-2007, imports from DCs fell by 5% in value and grew 5% in 2008 compared to 2007. The different regions showed varied patterns during the period 2006-2008: • Growing imports (+2% in value terms) came from Asian DCs, like India (+33%) and

Pakistan (+29%) and despite falling imports from China (-25%). Other Asian countries accounting for increasing imports during the review period were Vietnam, Sri Lanka, Bangladesh and Thailand. Import from Asian DCs accounted for 80% of total imports from DCs.

• Imports from European DCs increased by 6% in 2006-2008. It should be noted that Turkish exports to the EU grew (+3% during 2006-2008). Other significant exporting countries from Europe were Ukraine (+39%), Croatia (-16%), Bosnia & Herzegovina (+102%) and new supplier Moldova. European countries accounted for 19% of total imports from DCs.

• Imports from North African countries decreased by 6% in the review period. It should be noted that exports by Morocco and Tunisia fell by respectively 5% and 44%.

• Imports of leather garments from other area were very limited or zero. Table 4.4 Imports of leather garments from developing countries, 2004-2008 2004 2006 2008 AAGR* in value €

million 1,000

tonnes €

million 1,000

tonnes €

million 1,000

tonnes 2004-08 2007-08

Total EU 1002.1 34.4 970.1 33.6 983.4 29.9 -0.5% 5.1% Germany 290.8 10.5 262.1 8.6 268.9 7.7 -1.9% 3.7% Italy 120.6 3.2 128.8 3.3 141.2 3.1 4.3% 2.4% France 92.0 2.8 109.5 3.2 118.6 2.9 7.2% 28.8% Spain 132.7 3.6 115.8 3.7 116.5 3.3 -3.1% 3.9% UK 112.4 4.5 93.3 4.3 86.8 3.2 -5.7% -8.7% Netherlands 63.3 2.4 72.9 2.8 71.6 2.7 3.3% -4.5%



2004 2006 2008 AAGR* in value €

million 1,000

tonnes €

million 1,000

tonnes €

million 1,000

tonnes 2004-08 2007-08

Denmark 26.5 1.1 42.8 1.9 49.9 1.9 22.0% 27.7% Belgium 47.2 1.8 48.3 2.0 46.8 1.8 -0.2% 14.5% Sweden 25.2 0.9 23.0 0.8 20.6 0.6 -4.6% -5.9% Greece 37.4 1.0 20.0 0.6 13.2 0.3 -16.2% -15.9% Austria 7.6 0.2 9.7 0.3 10.2 0.3 8.4% 10.5% Poland 2.8 0.1 3.0 0.1 7.9 0.3 46.2% 28.7% Czech Republic 9.5 0.3 9.9 0.3 7.8 0.3 -4.4% 18.9% Finland 4.6 0.2 6.1 0.3 6.3 0.3 9.2% 3.7% Portugal 9.8 0.3 6.7 0.2 5.1 0.2 -12.1% -4.9% Romania 3.0 0.4 6.1 0.6 4.2 0.6 9.9% 8.6% Lithuania 1.6 0.1 2.2 0.1 2.1 0.0 7.7% 1.6% Hungary 5.2 0.4 3.2 0.2 1.8 0.1 -16.2% -14.9% Slovakia 3.4 0.2 1.4 0.1 1.4 0.1 -14.5% -1.9% Bulgaria 1.2 0.2 1.1 0.0 1.0 0.1 -3.9% -20.0% Ireland 0.2 0.0 0.4 0.0 0.5 0.0 20.9% -9.2% Latvia 1.2 0.1 1.3 0.1 0.4 0.0 -15.9% -32.6% Estonia 1.6 0.1 1.2 0.1 0.3 0.0 -20.3% -64.9% Slovenia 1.2 0.1 0.5 0.0 0.3 0.0 -19.2% -5.5% Cyprus 0.8 0.0 0.4 0.0 0.1 0.0 -22.0% -60.9% Malta 0.0 0.0 0.0 0.0 0.0 0.0 -19.0% 261.7% Luxembourg 0.3 0.0 0.4 0.0 0.0 0.0 -25.0% -100.0%

* Average annual growth Source: Eurostat (2009) Import share (in terms of value) of DCs in total imports of the individual EU countries varied strongly in 2008: • A dominating role of DC in countries like Denmark (87%), Spain (77%), Germany (76%)

and Italy (74%); • More than the EU average (61%) in The Netherlands (68%), Sweden (65%) and the UK

(61%); • Below the EU average and more than 35% in France (50%), Belgium (49%), Romania

(42%), Greece (39%), Finland (39%), the Czech Republic (37%) • Between 20-35% in Poland (29%), Hungary (25%), Baltic countries (24%), Portugal (21%) • DCs played a minor role in Austria (16%), Slovakia (14%), Bulgaria (13%), Ireland (7%)

and Slovenia (5%). 4.4 Exports The EU member states exported 15.9 thousand tonnes of leather garments with a value of € 1.1 billion in 2008, representing an annual increase in value of 3.6% in 2004-2008. Export activities by EU countries vary strongly. The leading EU exporter of leather garments was Italy (36% of total EU exported value), followed by Germany (20%), France (11%), Spain (6%), The Netherlands and Denmark (each 5%), Belgium (4%) and the UK (3%). As described in the previous chapters, EU exporters suffered, during the review period, from the appreciation of the euro against the US dollar. An overview of exports of leather garments by the EU countries (in volume and value) is given in the table below. Table 4.5 EU exports of leather garments, 2004-2008, in volume and in value 2004 2006 2008 AAGR* in value €

million 1,000

tonnes €

million 1,000

tonnes €

million 1,000

tonnes 2004-08 2007-08

Total EU 925.2 12.9 989.0 14.8 1,059.7 15.9 3.6% 0.3% Italy 318.0 1.8 342.1 1.9 383.4 2.1 5.1% -1.9% Germany 174.2 2.8 184.4 3.0 207.1 3.2 4.7% 3.8% France 100.9 0.8 105.5 1.1 114.2 2.0 3.3% 4.3%



2004 2006 2008 AAGR* in value €

million 1,000

tonnes €

million 1,000

tonnes €

million 1,000

tonnes 2004-08 2007-08

Spain 52.6 0.6 48.2 0.7 66.8 1.9 6.8% 15.1% Netherlands 48.0 1.2 51.1 1.6 53.4 1.2 2.8% -13.8% Denmark 24.5 0.6 43.3 1.3 51.1 1.4 27.1% 14.5% Belgium 46.9 1.7 48.6 1.8 44.5 1.3 -1.3% -1.4% UK 33.0 0.8 35.3 0.8 32.8 0.6 -0.1% -3.8% Austria 28.7 0.6 38.2 0.7 25.9 0.5 -2.5% -5.5% Sweden 20.8 0.6 22.8 0.6 18.8 0.4 -2.5% -7.5% Romania 18.6 0.4 19.2 0.3 18.4 0.3 -0.2% 0.4% Poland 12.5 0.2 13.4 0.2 12.6 0.2 0.1% -8.3% Czech Republic 15.5 0.4 8.9 0.2 8.4 0.2 -11.4% -3.7% Slovakia 1.9 0.0 3.0 0.1 3.5 0.0 21.5% 15.4% Slovenia 4.3 0.1 3.8 0.0 3.2 0.0 -5.9% -7.8% Finland 4.5 0.0 3.2 0.0 2.9 0.0 -8.9% -5.7% Hungary 8.3 0.1 6.3 0.1 2.7 0.0 -16.8% 5.4% Portugal 2.3 0.0 2.2 0.0 2.2 0.0 -0.4% -25.1% Greece 3.6 0.0 4.6 0.1 2.1 0.1 -10.5% -42.4% Bulgaria 2.4 0.0 1.8 0.0 1.4 0.1 -10.5% -27.3% Estonia 0.6 0.0 1.3 0.1 1.1 0.0 19.6% 0.1% Lithuania 0.4 0.0 0.6 0.0 1.0 0.0 40.2% 59.8% Latvia 0.2 0.0 0.4 0.0 0.8 0.0 71.2% 39.3% Luxembourg 0.4 0.0 0.1 0.0 0.6 0.0 11.8% 48.0% Ireland 2.0 0.0 0.4 0.0 0.6 0.0 -18.1% 28.7% Cyprus 0.4 0.0 0.3 0.0 0.0 0.0 -23.6% -86.9% Malta 0.0 0.0 0.0 0.0 0.0 0.0 -22.9% -94.5%

* Average annual growth Source: Eurostat (2009) A rising share went to countries outside the EU in the period under review: 31% in 2004, 32% in 2006 and 33% in 2008. The main destinations outside the EU were Switzerland (8% of total EU exports and 23% of non-EU exports), Russia (7% of total exports), the USA (5%), Japan (3%), Hong Kong (2%), Ukraine and Norway (each 1%). Re-exports Exports by major EU countries as described above include so-called re-exports: imported products, which are exported to other (mainly other EU) countries. When a garment is exported – say - from China to the USA, this is straightforward. Smuggling or deliberate mis-description, whatever protectionist lobbyists claim, is rare. Exporters are highly motivated to get their descriptions accurate, as errors in product descriptions lead to clothes being delayed. There are some complications in the EU. A garment unloaded from a ship in Antwerp (Belgium) or Rotterdam (The Netherlands) and then moved by land to Germany might, depending on how the contract is set up, be registered as an import by Belgium re-exported to Germany, or an import by Germany, or (if the garment is bought directly by a company based in The Netherlands for sale in Germany), an import by The Netherlands, re-exported to Germany. The same complication can happen at any EU border. Most clothes imported into the EU first arrive at an EU country which is not the one where it will finally be sold. Analysing this is further complicated by the fact that country-to-country movements within the EU are not monitored in the same way and are often not monitored by Customs authorities at all. Generally spoken, the volume of re-exports can be estimated when national production statistics are available and the destination of production can be divided into domestic sales and exports by industry. For instance: available production figures in Belgium and The Netherlands are rather limited and include production abroad by manufacturers. For that reason, re-exports by Belgium or The Netherlands cannot be determined, however, it can be assumed that 45-50% of leather garments imports by these countries is re-exported and has included a major share of transit trade.



Besides the countries mentioned, re-exports by Germany, Austria and Denmark are significant, while re-exports in the other major EU countries are more limited, but growing strongly. 4.5 Opportunities and threats + Many factors like, among others, increasing costs, lack of workforce and quality as well as

longer lead times limits the growth of Chinese exports. These criteria mean the relative advantage of China over other countries, such as India, Pakistan, Vietnam, Sri Lanka, Bangladesh, Thailand etc., is decreasing.

± To satisfy the requirements of importing European companies, exporters in DCs will be faced with increased demands for higher quality. More information concerning ethical and environmental aspects can be found in CBI’s website. With the right strategy and a carefully thought out development plan, there is no reason why these challenges cannot be met.

± A decreasing share of 61% of the leather garments imports into the EU came from DCs in 2008. This percentage was 63% in 2006 and 64% in 2004.

± In several East European EU countries, imports from DCs decreased considerably and were replaced by imports (mostly re-exports) from countries like Germany, Austria, Belgium, The Netherlands etc.

- EU imports of leather garments during the first nine months in 2009 declined compared to the same period during 2006-2008.

4.6 Useful sources • EU Expanding Exports Helpdesk - http://exporthelp.europa.eu go to: trade statistics • Eurostat – official statistical office of the EU - http://epp.eurostat.ec.europa.eu go to

‘themes’ on the left side of the home page go to ‘external trade’ go to ‘data – full view’ go to ‘external trade - detailed data’

• Understanding Eurostat: Quick guide to easy Comext http://www.eds-destatis.de/en/database/download/Handbook_Comext_Database.pdf

• Euratex bulletins - http://www.euratex.org

http://exporthelp.europa.eu/

http://epp.eurostat.ec.europa.eu/

http://www.eds-destatis.de/en/database/download/Handbook_Comext_Database.pdf

http://www.euratex.org/



5 Price developments 5.1 Price developments Statistics about consumer prices of leather garments have not been encountered. For that reason, table 5.1 includes developments in prices of clothing. The clothing market in the EU countries is intensively competitive and prices vary widely according to the product and type of outlet. A rough indication of differences in price levels by types of outlets has been given in chapter 2. Countries where pricing is similar have been identified. According to a study by Eurostat on comparative clothing price indices, there were five clusters of countries where prices are higher or lower than the average (100): • In descending order from the highest, Finland (121), Luxembourg (118), Sweden (115),

Austria (112), Lithuania (113), Latvia (113) and Italy (111). • Countries with above average prices were Belgium (110), Estonia (109), The Netherlands

(109), Greece (108), Denmark (108), Spain (103), Cyprus (103) and Malta (103). • Countries on the EU average were Germany (100) and Slovakia (100). • Countries with below average prices were Ireland (93), Czech Republic (93), Hungary (91),

France (91), Portugal (91) and UK (91). • At the other end of the spectrum, with the lowest prices were Slovenia (85), Poland (85),

Romania (65) and Bulgaria (58). Some markets in the EU shrank, while most others are growing at a slower pace. This development has placed pressure on price levels. Due to the diversity in products, it is not possible to focus on prices for individual products. The average import prices (in weight) were 9.3% higher in 2008 than in 2004, caused by much higher import prices from DCs (+11.3%) while prices of intra-EU trade fell slightly (-1.1%). Table 5.1 gives an overview of consumer and import prices in the individual EU countries during the period 2005-2007. Table 5.1 Consumer prices of clothing and import prices of leather garments in the EU, 2006-2008

Consumer prices of clothing

Import prices of leather garments

2006-07 2007-08 2006-07 2007-08 Austria 2.2% 4.8% -4.7% 18.0% Belgium 0.4% 1.3% 10.7% -3.8% Bulgaria 7.0% 3.7% 0.9% 23.8% Czech Republic -0.6% -3.9% 4.3% 20.9% Denmark -1.7% 1.2% 4.8% 11.6% Estonia 4.1% 1.6% 31.6% 35.1% Finland 0.3% 0.7% -4.3% 8.2% France 0.7% 3.5% 1.2% 25.1% Germany 0.9% 1.4% 4.5% 10.8% Greece 3.2% 3.9% -33.3% -35.6% Hungary 1.0% 2.5% 6.7% 7.4% Ireland -3.3% -13.2% -3.6% 19.6% Italy 0.7% -0.4% -1.6% 4.8% Latvia 2.3% -5.7% 31.2% 26.0% Netherlands 2.2% 4.8% -2.8% -6.0% Poland -7.2% -7.6% 7.0% 1.0% Portugal 2.2% -2.4% -10.4% 16.4% Romania 3.3% 2.5% -8.5% 25.0% Slovakia 0.8% -1.1% -11.0% -8.7% Slovenia 1.6% -1.8% 12.0% 5.0% Spain 1.1% -2.2% -1.8% 4.2% Sweden 2.4% 2.0% -0.3% 7.1%



Consumer prices of clothing

Import prices of leather garments

2006-07 2007-08 2006-07 2007-08 UK -3.7% -8.2% 8.0% 14.9% EU 0.0% -1.0% -7.7% 15.6%

Source: Euromonitor and Eurostat (2008) Although price is not the only marketing tool for exporting leather garments to EU markets, it is certainly a very important one. Concentration of buying power, increasing supply and global sourcing of clothing put pressure on processes and margins throughout the value chain. Exporters should have: • A clear insight into their cost prices for exports to EU markets, in order to set a minimum

selling price. At least all variable costs and part of the fixed costs should be covered by the selling price. If the market price is lower than the minimum selling price, a loss situation can easily occur. Although this could be acceptable for individual orders in order to prevent larger losses (stock losses), in the longer term this situation will undermine the financial stability of the company.

• Try to ensure efficiencies in operations in order to decrease cost prices, for example: reduction of stocks, more efficient production runs, negotiate lower purchase prices for raw materials and packing materials, etc.

MARKET SURVEY: THE FOOTWEAR MARKET IN THE EU 5.2 Useful sources There is a number of ways to find out about EU leather garments prices, depending on whether you want to find out about manufacture, wholesale or retail prices. A good way to obtain information about prices and price levels in the EU is by visiting one of the major trade fairs or trade centres or by contacting a manufacturer or a wholesaler. They may not always be prepared to discuss prices openly, but looking at both sets of prices will also give you an idea of margins. However, you should always ensure that you are comparing exactly the same thing. Some products may appear to be similar, but there may well be very sound reasons why their prices differ. Shopping in the prospective target country, at several retail shops is another good way of obtaining information about prices at retail or consumer level, but also about fashion, colours and qualities. You can find prices in mail order catalogues, but the main source now is Internet. There are many Internet websites providing retail prices. Many of them are country specific and mentioned in the surveys covering individual countries. To see how the same product compares across different EU countries, you may best be served by looking at websites of retailers (which are sometimes also manufacturers) which have a presence in a number of EU countries, and by visiting the individual country sites.



6 Market access requirements As a manufacturer in a DC preparing to access EU markets, you should be aware of the market access requirements of your trading partners and the EU governments. Requirements are demanded through legislation and through labels, codes and management systems. These requirements are based on environmental, consumer health and safety and social concerns. You need to comply with EU legislation and have to be aware of the additional non-legislative requirements which your trading partners in the EU might request. Standards and requirements Despite EU harmonisation, which enables free trade between EU member states, individual markets have different requirements regarding quality, materials used, standards, sizes, colours, etc. There is no European Union standard or any other official standard for leather garments. Most of the importers, especially the retail organisations, work on the basis of certain minimum requirements. In view of this, they have formulated and stipulated minimum quality requirements, relating to both materials and manufacture. Methods of testing garments are mainly based on EN ISO standards (http://www.iso.org). The main physical tests are tear strength, flex crack resistance of the finish (in normal and cold conditions) and dimensional stability to dry cleaning. Depending on the finish, the colourfastness tests required are resistance to rubbing, light, water, perspiration, water spotting and dry cleaning. Innocuousness tests for chromium VI, pentachlorophenol (PCP) and banned aromatic amines from some azo dyes should also be carried out. The minimum standard and the test method are described for materials and manufacturing. For example: colourfastness change: EN ISO 105-A02, staining EN ISO 105-A03, light EN ISO 105-B02, dry cleaning leather EN ISO 11643, water spotting leather EN ISO 15700, rubbing leather EN ISO 11640. For example, a description of manufacturing requirements can include among others: tear resistance of leather (EN ISO 3377). Minimum seam allowances for pressed open seams, criteria for sewing of fastenings, hems, pockets, collars, waistbands, linings, usage of yarns (monofilament is not allowed) can be part of the requirements. Some animals are protected by the “Convention on International Trade in Endangered Species of Wild Fauna and Flora” (CITES). Trade in garments made of these animals is strictly regulated or forbidden. More and more importing companies in the EU announced requirements on ethical aspects of clothing (including leather garments) manufacture. For example H&M, an internationally operating chain from Sweden, has a comprehensive product policy based on a number of principles, including the following regarding leather garments: • H&M accepts leather only from cows, buffalo, sheep, goats and pigs raised for meat

production; • H&M does not sell real exotic animal skins including but not limited to snake, alligator,

crocodile, lizard and ostrich; • H&M does not accept leather from India, due to the occurrence of cruel animal

transportation there. For more information on legislative and non-legislative requirements applicable to leather garments go to ‘Search CBI database’ at http://www.cbi.eu/marketinfo, select garments and the EU in the category search, click on the search button and click on your subject of interest under non-legislative requirements for an overview of all documents on the subject concerned.

http://www.iso.org/




Packaging Care must be given to the packaging of products, if one intends to export to the EU countries. It is obvious that the packaging must be travel-steady. As required, products should also be protected against the elements, changes of temperature, rough handling and theft. Besides these basics of travel- and handle-durability, some importers may have specific demands concerning packaging, like information concerning the order being printed on the boxes (order number, box number, name department or contact person etc.). For environmental reasons, packaging made from materials like PVC etc. is less popular with consumers and in some cases is or will be forbidden by government. Exporters in DCs should be prepared to discuss this issue with potential clients and if required, should anticipate building the cost of such special packaging into their wholesale price. Leather garments are usually individually placed in ventilated bags and then packed in a cardboard box containing several items. The box is wrapped in a plastic foil and put into a waterproof textile bag. The use of anti-bacteria or anti-fungus chemicals on the finished product is recommended. Additional information on packaging can be found at the website of ITC on export packaging: http://www.intracen.org/ep/packaging/packit.htm Size marking The following body measurements are used in the EU: body length, chest, waist and hip size. These four basic measurements determine the fitting of the garments. The measurements in the tables below are an indication and are averages of the size tables used by home shopping companies and international clothing chains. The following sizes are generally used in the EU (note that, for all sizes, the body length of women is 168 cm and for men 176 cm): Table 6.1 Size table for women's outerwear (body sizes) in cm Character sizes XS S M L XL XXL figure sizes 34 36 38 40 42 44 46 48 50 Chest width 80 84 88 92 96 100 104 110 116 Waist size 61 64 68 72 76 81 86 91 97 Hip girth 86 90 94 98 102 106 110 114 118

Table 6.2 Size table for men's outerwear (body sizes) in cm, except trousers/jeans Character sizes

XS S M L XL XXL

figure sizes 42 44 46 48 50 52 54 56 58 60 Chest width 84 88 92 96 100 104 108 112 116 120

The lack of uniformity in sizes has been a continuous problem in Europe for many years. This is caused by the lack in standardisation of sizes and differences between the European countries. For example The Netherlands size 38 is 40 in France and 42 in Italy. An European Commission for Standardisation (CEN) has developed one system for sizes. This system will consist of three elements: a pictogram (drawing of the body); digits for actual sizes; and symbols for different body types. Apart from the EU countries, also Iceland, Norway and Switzerland will join this new system. However, a general acceptance has not yet been reached. In the major EU countries, except the UK and Ireland, the same figure sizes are used, although the actual sizes are not equal. For instance: for a woman with a bust of about 88 cm, a waist of about 68 cm and hips of about 94 cm, her dress size at the moment is 38 in Germany, Denmark and The Netherlands, C38 in Sweden and Finland, 40 in Belgium and France, 44 in Italy, 44/46 in Spain and Portugal. As mentioned above, the UK uses a different sizing system: figure size 36 in Germany (and some other EU countries) is indicated in the UK (and Ireland) as 8, 38 as 10 etc. International clothing size comparisons can be found at several websites, such as: http://en.wikipedia.org/wiki/Clothing_sizes or http://www.brightonarea.co.uk/ebay/conversion.html

http://www.intracen.org/ep/packaging/packit.htm

http://en.wikipedia.org/wiki/Clothing_sizes

http://www.brightonarea.co.uk/ebay/conversion.html



Because of e-commerce and internationalisation of retail shops (for instance: H&M, C&A and many others), one can say that the above size table is used as a standard in all EU countries. In some cases a garment will have an indication for all different countries with their own size, as mentioned above. It should, however, be noted that different interpretations by manufacturers, wholesalers and retail organizations can occur regarding sizing! Different interpretations are also possible between different countries. Exporters should discuss this in detail with (potential) clients, to obtain clear information. Labelling The EU has set up legislation regarding the labelling of garments (Directive 2008/121/EC) and footwear (Directive 94/11/EC) but not for leather garments. Basic information like brand name and size (discussed above) is extended with information about: • Materials used; outer material, lining, padding etc. must be mentioned separately. A

product cannot be labelled as 100% leather if some components of the product are made of non-leather materials, such as polyurethane or PVC. Besides the terms: genuine leather (echtes leder, cuir veritable, el cuero genuine, couro genuine or echt leer), the leathermark is often used on labels as well as in other communication forms (advertising etc.). This mark identifies products made from genuine leather. Another symbol identifies coated leather. In some countries, the animal name and/or type of leather has to be mentioned, as will be discussed in the individual country surveys.

• Country of origin; this means that the name of the country of origin should be mentioned and that it is prohibited to mention the name of any country other than the country of origin on the label which is sewn in the garment. At the moment, there is no EU regulation/obligation to mention the origin in the EU, however there are some national exceptions.

• Leather garment care instructions; to avoid claims, special (or professional) dry cleaning (besondere reinigung, reaitement special, limpiar especial, lavagem especial or speciale reiniging) can be mentioned on a label. Often the basic Ginetex symbols (http://www.ginetex.net) are used, such as washing (wash tub), chlorine based bleaching (triangle), ironing (hand iron) and tumble drying (circle in a square). A cross has to be placed on all the symbols mentioned. The symbol letter P within a circle and a bar below the circle refers to a mild cleaning process with stringent limitation of added humidity and/or mechanical action and/or temperature. Commercial stain removers on a solvent base may be used with some restrictions.

• Affixed information (f.e. on a leaflet) about a leather garment can be given, such as storage, cleaning and advice to prevent damage. There is an increasing awareness of the need to keep the consumer informed about prospective and current purchases. Cleaning leather is complex and often requires specialist attention. Potential problems after cleaning include shrinkage and changes in colour and appearance due to previously undetected faults in the leather. Advice for caring depends on the leather type: finished grain leathers may be wiped with a damp cloth. Worn or scuffed areas can be restored with specific leather products. Brushing suede after wear with a dry sponge or soft cloth whilst the leather is slightly damp will restore the nap. Light soiling may be removed by specialist cleaning products, a rubber block or pumice stone. All garments should be dried naturally, away from direct heat and stored on a well-shaped hanger.

Some additional remarks: • The official language of the country has to be used on the labels. • The mandatory requirements are mentioned in the relevant country surveys. • The place of the label in garments varies (mostly neck or side-seam) and can be part of the

importer’s requirements.

http://www.ginetex.net/



It should be noted that different interpretations can occur regarding mandatory labelling in EU countries. Exporters should discuss this in detail with (potential) clients, to obtain clear information. Tariffs and quotas Up-to-date information on import tariffs and an updated list of least-developed countries/LDCs can be obtained from the Customs authorities in Rotterdam, The Netherlands, through their on-line system, known as the Integrated Tariff of the European Communities (TARIC) at http://www.douane.nl. Click on ‘Business’ and on ‘Imports’ where you will have to mention the HS code of the clothing product concerned. HS code for articles of apparel leather or composition leather is 42.03.10.00. Other sources of information can be found at the EU export helpdesk http://exporthelp.europa.eu. Anti-dumping measures Anti-dumping implies that, under WTO regulations, exporters are expected to sell their products at a fair market value, at a price above cost and without imposing higher domestic prices for the same product that would, in effect, subsidize their lower export prices. In the event of predatory pricing by a particular company or country, the importing country is allowed to impose a duty surcharge on the imported product, to bring the final price up to fair market value. The latest information on anti-dumping can be found at http://exporthelp.europa.eu. Anti-fraud investigations and actions The EU is stepping up anti-fraud investigations and actions against fraud, designed to: • circumvent trade policy measures, such as anti-dumping measures; • benefit illegally from preferential treatment such as that under RGSP; • cheat consumers (claiming EU origin for products produced elsewhere); • combat counterfeiting and piracy (copying exclusive designs and models without permission

of the owner). Environmental legislation Details of how to find legislative requirements are mentioned above, but the new regulations on chemical substances affect leather garments, and should be noted carefully. The EU regulation on chemical substances, called REACH, has been in force since 2007. For more information on REACH, see the document on what exporters need to know, on the CBI website (http://www.cbi.eu/marketinfo). • Italy

In Italy there is no provision on compulsory made in labelling in force at present. Article 6 letter c of "decreto legge 206/2005" (italian consumer code) makes it obligatory to indicate the extra-EU country of origin of the goods, but said norm is NOT yet in force and at the moment there is no specific term for its entry into force. Maybe the Italian legislator is aware of the potential problems that could arise at EU level with reference to free circulation of goods, should said norm enter into force. What should be kept in mind though, is the fact that there are various other provisions - some of them pertaining to criminal law - which sanction those who create false or deceptive/misleading impressions in consumers, as to the origin of the goods. For example, if a garment produced in China has the name and address of the Italian company for which it is produced and next to it an Italian flag, there is a concrete risk that the consumer might think that the goods have been made in Italy, even though they have not. In such and similar cases, in order to avoid criminal and civil sanctions, one should write on the label "importato da [nome e sede dell'impresa]" and/or "made in China, India etc". To conclude: the "made-in" label is not compulsory as long as there is no real risk of deceiving the consumer and even where such risk might occur, one can avoid it by stating on the label that the product is imported, without necessarily specifying from which country.

http://www.douane.nl/






Greece Greece has set up a special law/regulation which will be applied in the near future. The regulation mentions obligatory made in labelling for products having non-EU origin. Is is not yet clear whether this information has to be affixed permanently or can be mentioned on a hang tag. Spain Spain has a similar regulation stating that any goods imported from non WTO countries (Ukraine, Belarus f.e) have to have an origin labelling affixed.



7 Opportunity or threat? An overview of the general opportunities and threats has been given at the end of the previous chapters: Consumption (chapter 1), Production 2 and Trade (3 and 4) in this EU survey. Specific opportunities in each EU market can be found in Chapters 1 and 3 of the CBI market surveys on individual countries. However, to define the opportunities more realistically, it is necessary to know the trends, in particular in the fashion industry, like leather garments. Once the trend is clear, it is important to know which target group in which country is involved. Knowing the trends • There is plenty of information available on trends and you can find some of the main trends

in this survey, in seasonal trends in CBI fashion forecasts (http://www.cbi.eu/marketinfo) and in several magazines as mentioned in the surveys of individual countries.

• In order to understand the trends, i.e. where they come from and how long they are likely to last, try to recognize the underlying demographic changes and consumer life styles. Try to identify a trend that may be suitable for your product, for example women are becoming larger and heavier, which has led to a marked increase in demand for bigger sizes.

• You should be aware that not everybody follows trends. For every trend there is a counter trend which presents untapped growth opportunities as well as potential threats. For example, while there is a rapid increase in the number of people who choose fashionable leather garments as a part of their life style, there is another growing group of people who prefer quality and basic items in the traditional colours and style, which they can use for a long time.

• It is important to know that trends are firstly picked up in Western and Northern EU countries. Most of the twelve new member states lag behind the others in terms of the adoption of new trends or developments. However, their integration into the EU has meant that this process will be speeded up, encouraged by media, internationally operating (clothing) chains and home-shopping activities.

Approach to the EU market • The EU and, generally spoken, many EU countries have a high share of DC imports in the

leather garments sector, which indicates that most EU countries are receptive to imports from DCs.

• Most EU companies have willingly sourced in cheaper labour countries (mostly DCs) and manufacturers have even shifted operations.

• Try to find out which EU countries really offer an export opportunity. Both in terms of consumption (and production) and imports, a few countries have the biggest share, but these big countries have generally lower rates of growth. The smaller countries have shown greater rates of growth, but the starting volumes are somewhat smaller. You can assess this and determine whether it could be favourable for you to start submitting offers to one group or the other - or in one country belonging to the first group, or in a country belonging to the second group.

• Generally, it will be easier for exporters in DCs to stay out of big producing countries and concentrate on medium-sized markets, where good price-quality ratios can facilitate entry.

• Another important issue is the variation in average import prices. The most sustainable and enduring way for DCs to enter the leather garments sector in the EU is by placing their offer in product and country markets where average import prices are increasing and, hence, value is being enhanced and not eroded. Decreasing average import prices indicate erosion, while increasing average import prices indicate value enhancement. This analysis can be done for the individual EU countries

• Instead of just focusing on a few large EU markets, it would be better to summarise all opportunities and threats you have found in the leather garments surveys on matters such as: market development, your target group, market niches, trends in fashion, design, production trends, trade flows, price developments, market access requirements. Once you have recognised your opportunities, you will have an idea as to which are the best EU countries to approach.




Identify your strengths and weaknesses • The result of this analysis depends on your specific situation e.g. proximity to the EU

market, small or large company, flexibility, overhead costs, knowledge of your export market etc.

• The next step is to examine your own strengths and weaknesses. Try to determine which type of exporter you are (CMT or OPT producer, FOB producer, producer of private labels or producer of own design, mainly using brand trademarks). Topics to be assessed are described in ‘Guidelines for exporting leather garments to the EU’.

• For example, if you are trying to enter the Spanish market at the top or middle segments of the market, your own capabilities are crucial for success. Design is highly valued in Spain so, as a new supplier, you must be able to provide your customer with access to a quality design team which understands the rapidly changing trends and styles. This is as important as production skills and capacity.

• If you are able to do this, you have a good opportunity. However, as Spanish fashion changes, buyers are not always loyal to particular overseas suppliers, so you may lose out to another supplier in your own country or a neighbouring country. This is a major threat, especially when you already have made some initial investment.

So, try to optimise your strengths and see how to overcome weaknesses in the future, as well as how to deal with threats in the marketplace. This analysis will be crucial for your decision on whether or not to start exporting to the EU.



Appendix A Product characteristics 1 Types of products In official trade and production statistics, only one number is available for leather garments. Therefore no distinction can be made between the actual types of products, whether they are for men or women, which kind of leather was used etc. In general, it can be said that market information about leather garments is difficult to obtain. Leather garments cover mainly different kinds of leather jackets and coats. This category is estimated to take up 85% of the EU market under study. The remainder consists primarily of trousers, leggings, skirts, dresses, body warmers, waistcoats, underwear and bikinis, which at present are in fashion. However, this is a wave motion. Items such as hats, gloves, belts and similar articles are not discussed. Information on some of these items may be obtained from the CBI and ITC reports on "Leather goods". If possible, a distinction will be made in the surveys between leather jackets and/or coats and other leather garments. Besides by type of product, the market for leather garments can be divided into combinations of the following criteria: • Variety of origin (sheep/lamb, goat/kid. pig/piglet, cow/calf etc.); • Finishing techniques - variety of finish (suede, split, shammy or chamois, nappa, nubuck

etc.) • Quality/price ratio - low, medium (sometimes classified into lower and higher medium) and

high; • Fashion - based on materials, style and colour; a difference can be made in classic fashion,

casual fashion and highly individualistic fashion; • End users - women's and men's wear and (to a much lesser degree) children’s wear; • Functional aspects - some categories of consumers prefer functional aspects above fashion,

aspects in leisure and/or profession, like for motorcycle driving (protective aspects) and for sexual activities (gay- and SM-scene).

The latter three criteria mentioned are discussed in chapter 3 of this survey. Leather used The material - type of leather - used determines for a large part the price category in which the article will be sold. In general, the term hides is used for the whole pelt from large animals (cattle, horse, etc.), in contrast to the term skin, the pelt of young (like calf and lamb) or small (like goat and sheep) animals. Cattle hide, general term for hides before tanning from a bovine of any breed or sex, usually mature, includes bull hide, steer hide, cowhide, and sometimes kip skin. Lamb and sheepskin (with or without wool), cowhides, calfskins, goatskins and pigskins are all used for leather garment production and all have their own characteristics. Finishing techniques • Suede: leathers which are finished by buffing the flesh side (opposite to grain side) to

produce a nap. The term refers to the napping process, and is unrelated to the type of skin used.

• Split: the underneath layer of side leather which has been “split” off. Devoid of a natural grain, it may be either sueded or pigment finished and embossed. The top layer of the hide, which contains the markings known as grain are called “full grain leather”. When the hide is split into three layers, the middle and the bottom layer are known as split leather.

• Chamois: the product of oil-tanning the underneath layer (called a flesher) which has been split from a sheepskin. The chamois tanning method employs train oil, most often cod liver



oil. The process is extremely labour intensive, and this is what makes chamois leather so expensive in comparison with chrome-tanned leather.

• Nappa: commonly used as a synonym for “grain leather”, or any smooth garment leather. Technically the term refers to sheepskin tanned in such a way that the underside of the hide has the appearance of grain leather rather than suede.

• Nubuck: a brushed grain-sueded leather; grain-sueded is a buffing process to raise the fibres on the grain side of a hide or skin to produce a velvet-like effect, known as “nubuck” leather. Different finishing techniques can give nubuck leather a dry, oil or wax appearance.

Table 1 Summary of leather used for clothing manufacture Origin of leather Type of leather Sheep and lamb Nappa Suede Double-face Chamois Skiver Steer, cow and calf Nappa Nubuck Split Goat and kid Full grain and suede Pig and hog Full grain and suede Exotic and fur-bearing animals For example snake and mink Kangaroo Nappa mainly

Source: Ken Nokes (Satra-Spotlight) Novelty skin types are (not exhaustive): Patent leather, leather treated with a waterproof film, on one surface; the treated surface is lustrous and reflective. Pearlised leather, the leather has been given a coloured, pearl-like luster. Embossed leather, leather that has a motif in relief; the embossing is achieved with a metal template, heat, and pressure. Printed leather, skins have been silk-screened or painted. Distressed leather, skins which have been treated to look worn and rough; manufacturers achieve this either by a mechanical process or by screen-printing. Quality/price ratio The quality of leather depends primarily on the selection of skins and secondly on the production, such as the method of tanning and finishing. The better the quality of a hide of skin, the less it has to be treated. The number and severity of defects in the surface of the hide or skin determine quality. The fewer holes, abrasions and stains, the higher the grade. Grade is not an indication of how wearable the leather is, but is based upon the skin’s visual appeal and the percentage of the skin or hide which can be used. Higher grades have more usable area. Leather is a natural product and some imperfection will always be present. There are definite differences in quality between hides and skins from different countries. Buffalo, goat and pig leather are, because of price and quality, mainly sold in the lower price category, which is the higher volume market. The major categories of leather in the EU market are: Steer, cow or calf leather: garment cow, plongé, calfskin, suede, nappa and nubuck cover several segments. Thinner and supple plongé is a top grain cow leather with wonderful drape and covers the high segments. Cow or calf is relatively inexpensive and is strong and durable. The larger size of the hide means less piecing of a pattern and less waste. A thickness of 0.8-1.2 mm (which can be compared with 2- to 3- ounce weights in the USA, where leather thickness is expressed as the weight in ounces per square foot) is often used for jackets, coats and pants. Nappa covers the lower and nubuck the higher part of the mid segment.



Pig and hog: primarily suede, it is the least expensive of the garment leathers. It is available in many grades, colours and weights. Pig suede up to 0.6 mm in thickness (1.5 ounces in weight), is suitable for shirts, pants, skirts, jackets and vests. Sheep and lamb: nappa leather, suede, chamois, shearling and mouton. Lambskin, or nappa lamb, is especially soft and is suitable for jackets, coats, pants, skirts and dresses. Lamb suede has a good draping quality; it feels like silk and is used for blouses, pants and skirts. Chamois is sometimes used for garments and is quite stretchy. Shearling and mouton are tanned with the wool intact. Lamb is more expensive than cow and is available in thickness of 0.8 mm or less (2 ounces or less in weight). Goat and kid: primarily soft leathers. Goatskin is soft but very strong. It is moderately priced and available in 0.8 mm thickness. Its beautiful grain and soft feel make it an excellent choice for jackets. As quality demands are high, clothing exporters and manufacturers of leather garments should take the following into consideration in their production procedures: • as leather garments are relatively expensive products, the processed leather must satisfy

high standards of craftsmanship. After tanning the leather, it is recommended to soften it in a softening machine;

• the cutting section: in general it is recommended to use knives rather than scissors for cutting, to use glass or polypropylene (instead of tin or zinc) as the basis for cutting with templates, to have good light above the cutting table, in order to achieve optimum leather selection and to set up the (large) cutting table at an angle of 30 degrees;

• industrial machines should be employed, with upper and lower transport and double seam capabilities, to ensure straight and parallel stitching; puckering should be avoided; reinforcement should be added in pockets; supple tape is preferred to glue, which becomes hard when dry; seams have to be hammered down and a thickness of 4 to 6 layers of leather should be avoided;

• the interlining should be in a quality standard equal to the whole garment; • the labelling: a well designed and good quality label is important; • accessories like buttons, zippers, buckles etc. should be of good quality in the right

(uniform) colours and clean (no rust or other impurities); • product information concerning the sort of leather used and maintenance of the garment

should be stated on a well-designed and clear quality card; • the packaging should be such as to prevent damage during transport.

2 Customs/statistical product classification

The classification system used for both Customs and statistical purposes in EU member countries is the Harmonised Commodity Description and Coding System (HS). In general the number clearly identifies a specific product and it is possible to see whether the garments concerned are for men or women and how they are made. Unfortunately, only one number is available for leather garments. Therefore no distinction can be made between the actual types of products and whether they are for men or women.

2.1 Statistical product classification of leather garments

Prodcom and Combined nomenclature (CN) Two different sets of statistical data are used in this survey. Both sets have been provided by Eurostat, the statistical body of the EU. The first set is derived from Prodcom. The term Prodcom is derived from PRODucts of the European COMmunity. This is a survey based on products of which the definitions are standardised across the EU to allow comparability between the member countries’ data. Prodcom covers some 4,800 products which are assigned to some 250 industries as defined by the Standard Industrial Classification (SIC). Prodcom data contain production, imports and exports. In this survey Prodcom data are used to indicate production.



The second set is the trade data based on the Combined Nomenclature. The abbreviation CN stands for Combined Nomenclature. This Combined Nomenclature contains the goods classification prescribed by the EU for international trade statistics. The CN is an 8-digit classification consisting of a further specification of the 6-digit Harmonised System (HS). HS was developed by the World Customs Organisation (WCO). The system covers about 5,000 commodity groups, each identified by a six-digit code. More than 179 countries and economies use the system. In this survey, CN data are used to indicate imports and exports. Based on the above data, apparent consumption can be calculated as follows: apparent consumption = production + imports -/- exports. Statistical data: limitations Trade figures quoted in CBI market surveys must be interpreted and used with extreme caution. The Prodcom data used in Chapter 1 and 2 are less reliable than the import and export statistics used in Chapter 4, as they are not part of official data collection for Customs. Companies only have to send in their data on an annual or quarterly basis. The figures sometimes show a discrepancy between years, e.g., a large fall or extraordinary growth. These problems are caused by inaccurate, inconsistent and untimely reporting by companies. However, Prodcom data are the only official source for production and apparent consumption data, displaying numbers at product group level and describing the different EU markets in detail. Therefore they are useful for obtaining an indication of size and trends within those markets. For decision making, however, these figures are not accurate enough and should be used in conjunction with further market research. In the case of intra-EU trade, statistical surveying is only compulsory for exporting and importing firms of which trade exceeds a certain annual value. The threshold varies considerably from country to country, but it is typically about € 100,000. As a consequence, although figures for trade between the EU and the rest of the world are accurately represented, trade within the EU is generally underestimated. Furthermore, the information used in CBI market surveys is obtained from a variety of sources. Therefore, extreme care must be taken in the qualitative use and interpretation of quantitative data, because it puts limitations on in-depth interpretation of relations between consumption, production and trade figures within one country and between different countries.

Detailed classification of leather garments by CN codes

42.03.10 Articles of apparel leather or composition leather Detailed classification of leather garments by Prodcom codes 1810.1000 Articles of apparel of leather or of composition leather (including coats and

overcoats and excluding clothing accessories). Prodcom includes the following codes, but this classification has not been applied in practice. 1810.1001 Coats and overcoats of leather 1810.1003 Ensembles of leather 1810.1005 Blazers and jackets of leather 1810.1007 Trousers and skirts of leather 1810.1009 Other articles of apparel of leather Selected EU countries This market survey consists of a survey on the EU and several surveys on individual Member States. There is no survey available for EU countries which import $ 500,000 or less from CBI target countries.



Appendix B Introduction to the EU market The European Union (EU) is the current name for the former European Community. As from January 1995, the EU consisted of 15 member states. Ten new countries joined the EU in May 2004. In January 2007 two more countries – Bulgaria and Romania - joined the EU. Negotiations are in progress with a number of other candidate member states. In this survey, the EU is referred to as the EU27, unless otherwise stated. Cultural awareness is a critical skill in securing success as an exporter. The enlargement of the EU has increased the size of the EU, but also significantly increased its complexity. Because there are more people from culturally diverse backgrounds, effective communication is necessary. Be aware of differences in respect of meeting and greeting people (use of names, body language etc.) and of building relationships. There are also differences in dealing with hierarchy, presentations, negotiating, decision making and handling conflicts. More information on cultural differences can be found in chapter 3 of CBI’s export manual ‘Exporting to the EU’. General information on the EU can also be found on the official EU website http://europa.eu/abc/governments/index_en.htm or the free encyclopaedia Wikipedia http://en.wikipedia.org/wiki/Portal:Europe. Monetary unit: Euro On 1 January 1999, the Euro became the legal currency within eleven EU member states: Austria, Belgium, Finland, France, Germany, Italy, Ireland, Luxembourg, The Netherlands, Spain, and Portugal. Greece became the 12th member state to adopt the Euro on January 1, 2001. Slovenia adopted the Euro in 2007, while Cyprus and Malta adopted the Euro in 2008. Slovakia adopted the euro currency on 1 January 2009 as the 16th member of the Euro zone. Denmark, United Kingdom and Sweden have decided not to participate in the Euro. In CBI market surveys, the Euro (€) is the basic currency unit used to indicate value. Table B-1 Exchange rates of EU currencies in €, average interbank rate Country Name Code Year

2009 February

2009 February 2009

1 euro = Bulgaria Lev BGN 0.51150 0.51072 1.95593 LEV Czech Republic Crown CZK 0.03915 0.03837 25.9651 CZK Denmark Crown DKK 0.13430 0.13430 7.44393 DKK Estonia Crown EEK 0.06391 0.06391 15.64666 EEK Hungary Forint HUF 0.00373 0.00367 269.794 HUF Latvia Lats LVL 1.42059 1.40597 0.70735 LVL Lithuania Litas LTL 0.28969 0.28919 3.45211 LTL Poland Zloty PLN 0.23945 0.24726 3.99530 PLN Romania Lei ROL 0.0237* 0.0200* 41,155.4 ROL Sweden Crown SEK 0.09451 0.10110 9.87122 SEK United Kingdom Pound GBP 1.15666 1.15108 0.86775 GBP *) in ‘000 lei Source: Oanda - http://www.oanda.com (February 2009)

http://europa.eu/abc/governments/index_en.htm

http://en.wikipedia.org/wiki/Portal:Europe

http://www.oanda.com/



Appendix C List of developing countries OECD DAC list - January 2006 When referring to developing countries in the CBI market surveys, reference is made to the group of countries on this OECD DAC list of January 2006. Afghanistan Gabon Nepal Uruguay Albania Gambia Nicaragua Uzbekistan Algeria Georgia Niger Vanuatu Angola Ghana Nigeria Venezuela Anguilla Grenada Niue Vietnam Antigua and Barbuda Guatemala Oman Wallis & Futuna Argentina Guinea Pakistan Yemen Armenia Guinea-Bissau Palau Zambia Azerbaijan Guyana Palestinian Admin. Areas Zimbabwe Bangladesh Haiti Panama Barbados Honduras Papua New Guinea Belarus India Paraguay Belize Indonesia Peru Benin Iran Philippines Bhutan Iraq Rwanda Bolivia Jamaica Samoa Bosnia & Herzegovina Jordan Sao Tome & Principe Botswana Kazakhstan Saudi Arabia Brazil Kenya Senegal Burkina Faso Kiribati Serbia Burundi Korea Rep. of Seychelles Cambodia Kyrgyz Rep. Sierra Leone Cameroon Laos Solomon Islands Cape Verde Lebanon Somalia Central African Rep. Liberia South Africa Chad Libya Sri Lanka Chile Macedonia St. Helena China Madagascar St. Kitts Nevis Colombia Malawi St. Lucia Comoros Malaysia St. Vincent & Grenadines Congo Democratic Rep. Maldives Sudan Congo Rep. Mali Suriname Cook Islands Marshall Islands Swaziland Costa Rica Mauritania Syria Cote d’Ivoire Mauritius Tajikistan Croatia Mayetta Tanzania Cuba Mexico Thailand Djibouti Micronesia, Fed. States Timor-Leste Dominica Moldova Togo Dominican Republic Mongolia Trinidad & Tobago Ecuador Montenegro Tunisia Egypt Montserrat Turkey El Salvador Morocco Turkmenistan Equatorial Guinea Mozambique Turks & Caicos Islands Eritrea Myanmar Tuvalu Ethiopia Namibia Uganda Fiji Nauru Ukraine



CBI countries – January 2007: CBI supports exporters in the following Asian, African, Latin American and European (Balkan) countries: * Albania * Armenia Bangladesh Benin Bolivia * Bosnia-Herzegovina Burkina Faso Colombia * Ecuador Egypt * El Salvador Ethiopia Georgia Ghana Guatemala * Honduras * India Indonesia * Jordan Kenya * Macedonia Madagascar Mali Moldova * Montenegro * Morocco Mozambique Nepal Nicaragua Pakistan * Peru * Philippines Rwanda Senegal * Serbia South Africa * Sri Lanka Suriname Tanzania * Thailand * Tunisia Uganda Vietnam Zambia * Assistance to these countries will be phased out in the coming four years, but Dem. Rep. of

Congo, Jemen, Mongolia, Sudan and Palestinian Territories will be added.

the market for leather garments in the eus3.amazonaws.com/zanran_storage/... · • the leather...

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