International clothing brands quit Romania

 “H&M moved its production to Vietnam. The Swedish company made some 20 million products in Romania every year, in six factories in the Focşani area. For all this, H&M was a major client, generating over 50 percent of orders,” Mihai Păsculescu, owner of the Zefir textile producer, told Business Standard. Zefir was the first company in Romania that signed a contract with H&M, in 1994, when the Swedish company entered the local market. H&M covered 60 percent of Zefir’s net sales, which meant annual revenues of €5 million, according to Păsculescu. He added that H&M’s relocation has cut Zefir’s production by half, which automatically led to layoffs.“C&A, Next, Lindex, Kiabi, and Marks&Spencer left for Banglasesh or Pakistan, because the workforce is less expensive,” said Sorina Plăcintă, owner of the Sorste company in Focşani. Păsculescu indicated that lohn production was “a necessary evil for Romanian textile producers, because all these foreign companies that came here brought know-how, structure and innovative management styles. After so many years working in this system, Romanian companies gathered sufficient knowledge to be launch their own collections at quality standards to compete with the foreign ones.”

Fixed costs, related to energy, gas, transport, and staff of domestic textile enterprises are, according to several market players, by up to one third higher then the European average and costs in Asian countries.

“The decline in demand and consumption forced major international brands to adopt a very strict cost-cutting policy and reorient production to countries with less expensive production and labour costs,” said Maria Grapini, owner of the Pasmatex textile producer and President of the Association of Employers in the Light Industry (FEPAIUS).