2. BSP2 PERFECTLINK Project Survey on Competitiveness in Textile/Clothing and Leather Sector in LITHUANIA Lithuanian Apparel and Textile Industry Association

3. 1.Survey on competitiveness in Textile/ Clothing and Leather Sectors in Lithuania was conducted at the end of year 2004. 2.83 Lithuanian companies that have responded to the questionnaire on competitiveness including: Spinning/ Weaving companies – 37 percent of total responses received (31 company) ; Clothing ( Apparel) companies – 55 percent (46 companies) ; Leather Companies – 3 percent ( 2 companies) ; Leather Products ( including Shoes) producers – 5 percent ( 4 companies) ;

4. Surveyed Lithuanian companies according to the products produced /sold

5. Surveyed Lithuanian companies according to the origin of their products

6. Size of Lithuanian companies Size of Lithuanian companies according to the turnover, Million EUR Size of Lithuanian companies according to number of employees

7. Lithuanian companies: Sales according to geographical markets

8. Lithuanian companies: General Awareness on Competitiveness

9. Lithuania : Companies’ readiness to compete in liberalized market in short-term period If Lithuanian companies need to change in order to remain competitive ? Competitive position of Lithuanian Textile/Clothing companies in the market in the next two years

10. Most threatening competitors of Lithuanian textile, apparel and leather companies

11. Lithuania: the Chinese issue 1.Did Lithuanian Textile / Clothing and Leather companies have direct consequences of the recent increase in Chinese competition ? –Yes : 82 % –No: 18 % 2.Negative influence was: –Very remarkable :13 % –Significant : 66 % –Minor : 20 % –Other: 1 % 3.Consequences were: –Loss of clients: 30 % –Reduction of sales to one or more clients: 28 % –Decrease of own prices in order to maintain the same level of sales: 22 % –Reduction of quantities and decrease of price in own sales : 20 %

12. Lithuania: the Chinese issue 4.Segments of clients where Lithuanian Textile/Clothing and Leather companies faced Chinese competition : –EU 25 importers/wholesalers/retailers: 30 % –EU 25 manufacturers belonging to the same supply chain : 19 % –Domestic retailers and wholesalers : 18 % –Manufacturers from the rest of the world : 15 % –Other Lithuanian manufacturers belonging to the same supply chain: 13 % –Importers/wholesalers/retailers from the rest of the world: 11 % 5.Type of Lithuanian textile, clothing and leather products which were hit most by Chinese competition : –Upper range products: 16 % –Middle range products: 54 % –Lower range products: 30 %

13. Lithuania: the Chinese issue 6.Strongest competitive factors of the Chinese exporters according to Lithuanian textile, clothing and leather companies: –Price: 50 % –Price /quality ratio: 23 % –Customization / Flexibility : 20 % –Scope of product range: 7 % 7.Chinese manufacturers adopt unfair competitive practices: –Only sometimes : 5% –Often: 75% –All Chinese sales are characterized to some extent by unfair practices:20% 8.Do Lithuanian textile, clothing and leather companies have evidence of unfair practices: –Yes, direct evidence: 11 % –No direct evidence : 29 % –Only clues : 32 % –Rumors of the market: 28 %

14. Lithuania : the Chinese Issue Unfair commercial practices adopted by the Chinese : Dumping : 38 % Counterfeited products : 35 % Unregistered imports smuggling : 15 % False custom declarations : 12 %

15. Lithuania : China Issue The strongest allies of Chinese products : Traders ( Importers / Wholesalers) : 37 % Local consumers: 24 % Large retailers in Lithuania : 22 % Lithuanian manufacturers who outsource production in China : 13 % International brands present in Lithuania ( Benetton, Hugo Boss, etc.) : 4 %

16. Lithuania : the Chinese Issue Weaknesses of Chinese manufacturers : Quality : 41 % Delivery / Service: 38 % Product design : 21 %

17. Lithuania : the Chinese Issue PRICE competitiveness of Chinese producers : Large : 83 % Significant : 15 % Minor : 0 % No advantage : 2 %

18. Lithuania : the Chinese Issue PRICE/ QUALITY RATIO competitiveness of Chinese producers : Large : 19 % Significant : 62 % Minor : 15 % No advantage : 4 %

19. Lithuania : the Chinese Issue CUSTOMISATION competitiveness of Chinese producers : Large : 67 % Significant : 26 % Minor : 4 % No advantage : 3 %

20. Lithuania : the Chinese Issue PRODUCT RANGE competitiveness of Chinese producers : Large : 20 % Significant : 60 % Minor : 20 % No advantage : 0 %

21. Lithuania : the China Issue In the next years Chinese presence in European markets will : Increase: : 92 % Remain as it is today : 3 % Decrease : 3 %

22. Lithuania : China Issue Effective factors to counter Chinese competition under the current general trade conditions: Quality : 22 % Productivity increase and costs reduction: 20 % Brand / Communication : 18 % Service / Delivery : 17 % Fashion / Design : 16 % No factor is really effective : 7 %

23. Measures supporting competitiveness of Lithuanian Textile/Clothing and Leather companies: Lower taxes, lower social costs : 31 % Innovation support (technology,design, etc.): 27 % Support the financial strengthening of the companies: 20 % Support human resource development ( training, etc): 20 % Lithuanian market protection : 2 %

24. Do Lithuanian Textile, Clothing and Leather companies have a strategy to deal with the new competition ? We have been thinking about, but a new plan has not yet been outlined : 57 % Yes, we have developed a new competitive strategy: 36 % Others: We are developing business development plan at the moment: 5 % Not yet: 2 %

25. Actions to be taken by Lithuanian textile, clothing and leather companies in order to remain competitive Actions to be taken by Lithuanian textile, clothing and leather companies in order to remain competitive 1= low importance, 5 = high importance

32. Conclusion: Priority of actions to be taken by Lithuanian textile, clothing and leather companies in order to remain competitive Conclusion: Priority of actions to be taken by Lithuanian textile, clothing and leather companies in order to remain competitive (4=big importance, 5 = high importance) 4 5 4+5 Improvements in design and fashion : 20% 45% 65% Improvement of service components (delivery, etc): 36 % 28 % 64% Price reduction though cost reduction and increased productivity: 39% 16% 55% Price reduction through outsourcing of some production processes products : 26 % 21% 47% Quality improvement (materials and manufacturing process): 30% 15% 45% Investments in image, brand and communication: 9% 34% 41% Improvement of customer satisfaction through customisation: 22% 11% 33%