1. 3.1 SITUATION ANALYSIS & TYPOLOGY OF BUSINESS PATTERNS WORKSHOP BLAGOEVGRAD, 11/12/2012 Theofilos Aslanidis General Manager

2. THE APPAREL SECTOR IN GREECE 20002011% Number of companies14.4805.198-64% Employees80.97523.914-70% Exports (mil. €)1.469553-62% Imports (mil. €)1.1511.440+25% Trade balance (mil. €)318-887-379% Turnover *-44% Production *-64% Retail sales *-33.2% * Period 2005 - 2011

3. THE APPAREL SECTOR IN NORTHERN GREECE Northern Greece and especially Thessaloniki still remains the major centre of the Greek Apparel Industry Number of companies: 2.653 51% Number of employees: 12.248 52% Value of exports (mil.) 504 91% In the early 1990s Thessaloniki was the most important Apparel Textile Centre in South East Europe

4. MAJOR DECLINING FACTORS The competitiveness of China and other Asian countries especially after 2005 (textile & clothing liberalization) The growing importance of Turkey Reallocation of assets in other businesses (real estate, tourism, photovoltaic etc) The international financial crisis in 2008 The domestic economic crisis in Greece

5. NORTHERN GREECE ANALYSIS

6. SWOT ANALYSIS: NORTHERN GREECE APPAREL / TEXTILES STRENGTHSWEAKNESSES ■ Widespread entrepreneurship ■ Goodwill in large European markets such as Germany, Italy, Great Britain, France ■ Technical competencies along the chain, from cotton fibre to finishing and final manufacturing ■ Possibility of delocalization for low- cost manufacturing within commuting distance from Northern Greece in Bulgaria, FYROM and Albania ■ Low attitude of SMEs to act as an integrated system ■ Weakened textile chain ■ Aging entrepreneurs and aging workers ■ Widespread reliance on sales agents in Europe

7. OPPORTUNITIESTHREATS ■ Lower pressure from China both in terms of prices and quantities (medium term); concurrent refocus of European large buyers in neighbouring areas which can offer a relatively low total cost and logistic advantages ■ Growing preference of European consumer towards guaranteed or certificated goods for safety and sustainability (certification) of the materials (cotton fields) and the treatment (dying & finishing) ■ Proximity of strong competitors from Turkey and other low-cost surrounding countries that are attractive destinations for investors ■ Shrinking demand in Western markets ■ Financial problems of the Greek state, leading to additional taxes and other burdens, and very high degree of uncertainty ■ Unfair competition of illegal imports from low-cost countries ■ Increased costs of raw materials and energy

8. THE GREEK APPAREL SECTOR IN SOUTH EAST EUROPE 2011 Number of companies: 250 – 270 Number of employees: 22.000 Production per country: Bulgaria 57% F.Y.R.O.M. 20% Albania 10% Turkey 7% Romania 4% Other 2%

9. Results of the questionnaire from Greek apparel companies (21 companies)

10. CHARACTERISTICS OF THE GREEK APPAREL COMPANIES COOPERATION IN BULGARIA Figures 2011 SIZE Employment: Average 24.6 employees Turnover: Average size 4.9 million euro

11. PRODUCTION DATA 1. TOTAL PRODUCTION 2. OUTSOURCING ABROAD

12. TYPE OF COMPANIES

13. CHANNELS OF DISTRIBUTION PRIVATE LABEL COMPANIES GREEK LABELS (exporters) (local market)

14. EVALUATION OF COOPERATION PERIOD OF COOPERATION OVERAL EVALUATION

15. MAIN PROBLEMS IN BULGARIA

16. MAIN ADVANTAGES IN BULGARIA

17. STRATEGIC OPTIONS A. PRIVATE LABEL The reduction of the administrative and production cost. The outsourcing of the “expensive” operations in Greece or in Bulgaria. The approach of new customers in the E.U. or in other countries. The orientation in new products of higher added value and also of better design. The reduction, even more, of the lead time in the delivery of the products. The emphasize in smaller orders, in flexibility and in custom service.

18. B. GREEK BRANDS Emphasize in exports. Given of the reduction in consumption and in retail sales of clothing in Greece at the last three years, the only direction for the Greek brands is exports. The companies of that sector should organize their export departments with orientation in targeted markets, mainly in emerging countries. Reorganization of their structure by reducing their administrative cost. Reorganization of the distribution network. Reduction of the doubtful clients and reorganization of the retail network. Effort to reduce prices ( wholesale-retail) through the reorganization of their structure and cost reductions.

19. CONCLUSIONS Despite the downsizing the Apparel sector in Northern Greece has entrepreneurship, business orientation and traditional commercial attitude. The current Greek financial crisis is affecting the Apparel SMEs There is need for public support in providing access to credit Companies should continue restructuring and focus on their strategic options (cost / price reductions, exports, sort delivery, flexibility & custom service).