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Serbian Textile Production, opportunity for outsourcing?

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During the transition period since 2000 Serbian macro economy has stabilized and the real annual GDP growth has varied between 2 % and 5.3 %.  The textile and garment production represented 7 % of total manufacturing output and 3 % of GDP employing 75 000 people in 2003.  Before disintegration of the former Yugoslavia textile industry was one of the main export industries and over 70% of exports went to European customers. During the embargo most textile and apparel companies were forced to focus on the domestic market. Several large scale state owned textile mills had to scale down their volume and some ended up in bankruptcy.  But at the same time a number of new SMEs especially in the apparel sector was set up. By focusing on the domestic market with very little foreign competition they built strong brands and own retail chains.  Today the value of apparel exports is € 200 million and 70 % is exported to EU usually on CMT basis.

The labor costs in Serbia’s T/C sector are among the lowest in Europe, way below 100 €/month in the T/C sector. The cost price of one production minute is very competitive.  The labor force is skilled and experienced.  There are special schools for training sewing operators and technicians, and 100 textile engineers graduate annually.

The Serbian apparel industry depends heavily on imported fabrics as most of domestic fabric production has collapsed. The free trade agreements between Serbia and EU, Russia and Central European countries have reduced import duties to 0%.

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According to Serbian Investment and Export Promotion Agency the keys to success for the local T/C sector are as follows:

  • One of the most price competitive textile and apparel industries in Europe.
  • Quick and flexible deliveries and low order minimums.
  • Closeness to main European markets, especially Italy.
  • Good educational system produces highly skilled workers and management.
  • Serbian industry is a supplier to high quality brands in Europe and USA and through these contact understands top quality requirements.
  • Strong domestic brands and retail chains can compete in the local market and near-by countries.
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