Tuesday, August 27 2013

 

Armenians
have always been good at making clothes and shoes, but it is getting more and
more difficult to maintain these folk crafts in the globalizing world. Zara,
Hugo Boss, Levi’s, Armani and other world known brands overshadow the local
little known trademarks and endanger the further vitality of the centuries-old
traditions. The Armenian light industry, which was once widely developed, has undeservedly
fallen into oblivion. Meanwhile, it is able and it has been able to maintain
hundreds of thousands of families for many years. The authorities started
speaking of rehabilitation of this sector in 2010 and only now we hear the
faint echo of their promises. A Made in Armenia shop has recently opened in
Yerevan and become a real ray of light in the realm of darkness. The shop
represents several Armenian brands. According to the founders of the shop, it
is going to mark the beginning of big achievements in light industry and
rehabilitate the traditional crafts.

 

To start
with, the Union of Light Industry Employers was registered in Armenia in August
2011. This was the first and successful attempt to unite the “light”
industrialists. Today our Union unites 25 companies. There are about 60
companies in the light industry sector.

 

Would you explain the structure of the Union?
Does it allow solving the problems of several light industry subsectors simultaneously?   

 

To settle the problems of the sector effectively, a
decision was made to create a system of co-chairmen within the Union. I am one
of the four co-chairmen. I generalize the work of the other three co-chairmen who
manage the footwear industry, garment industry and the design of the future
samples. In addition, I have established a dialogue with the authorities, and
the Government of Armenia has adopted an export stimulation concept, which implies
development of 11 sectors of the Armenian economy, and light industry is the
seventh of them. I am glad to say that EV
Consulting has prepared a pilot project on light industry development. The
10-year program will be finally approved in September-October 2013.

        

How many
workplaces will be created within the next 10 years?

 

The light
industry sector may create 50,000 new jobs. The thing is that the given sector
is labor-intensive and mostly needs female workers. The sector needs no big
investments in innovative technologies and this enhances its attractiveness.

 

50,000 jobs
may almost rehabilitate the sector…

 

Yes, they
may. We remember that during the Soviet times the light industry sector
provided 100,000-120,000 people with jobs and was seriously represented by
Armenia. In addition, our surveys have demonstrated that the Armenian
businessmen abroad are very actively engaged in light industry, i.e. one can
say that Armenians are still interested in traditional crafts. It would be a
big gap to have independent Armenia without serious achievements in the light
industry sector.   

 

What’s the current state of the consumer goods
market? It is glutted with imported goods, isn’t it?  

 

Unfortunately,
the local manufacturers’ goods cover only 10% of the domestic demand. In
the meantime, the annual turnover of the consumer goods amounts to 280 mln USD.
We are set to satisfy the domestic demand by 70% within the next few years.
Along with development of the domestic market, we will be increasing the exports
to foreign countries. Here we need to solve numerous problems connected with
the shortage of high-skilled designers…  

 

Three years ago our officials spoke of creation
of a joint Armenian-Italian school of designers…  

 

Yes, they did. The school should have been founded
under the project on creation of the Gyumri technopark. But those plans
remained ink on paper. Now, according to the state program on export
stimulation, the Government is going to train skilled designers abroad, but our
Union disagrees with this idea. We suggest opening an Armenian-Italian institute of design and foreign trade. Why do
we insist on it? We are eager to create a truly Armenian brand, and only
designers that are well aware of the local traditions are able to do that. Even
the greatest designers in Italy, France or any other country are unable to
reproduce the diversity of tarazes as the element of our national culture.
There are no such specialists among the Armenian designers either, but one can
see them among the ethnographers studying the manners, culture and traditions
of nations.

 

What will follow the opening of the Made in
Armenia shop?  

 

We are
already considering opening a new trade center under the same name. It will
offer a much larger assortment of consumer goods. Unfortunately, I must say
that buying the products of Melante or Artsocks companies, for instance, most
of our citizens do not even know that these are Armenians brands. I think, Tosp
is the only company whose products are more or less familiar to the consumers.
We understood that problem and decided to open a small shop as a first step. At
the moment the shop offers the products of 5 local brands. The new trade center
will offer the products of 20-25 brands. The achievements of our Union have
caused the interest of jewelers, furniture makers and perfumers as well. They
also want to sell their products under the Made in Armenia brand.           

 

When will the new trade center open? 

 

If we fail
to open the trade center in Sept-Oct 2013, we will put off these plans to March
2014.  

 

How do the companies solve the problem of raw
materials? 

 

The
companies are using foreign raw materials, mostly the ones imported from
Turkey. But we will shortly create a big base, which will supply the whole
sector with raw materials. Thus, we will solve one of the urgent problems – we
will gain production continuity. In the future we will create our own raw materials base. In particular, within the short-term outlook we
are going to launch production of clothes accessories. Afterwards, we will re-launch leather making in Armenia.     

 

Many companies are working according to the
tolling principle...   

 

Actually,
the project on light industry development implies using tolling schemes as
well, but we see no prospects here. The most dangerous thing in tolling is that
you remain interesting for the foreign market for a few years, then your
capacities deteriorate and the investors move their productions to other
countries. In the meantime, by launching production inside the country and
exporting your own products, you create an added value, which allows solving
the problems of both technical and technological re-equipment.      

 

Will you, nevertheless, choose this path? 

 

Our Union does
not advocate this idea. We want to enter the international market with our own
products. Certainly, it is fraught with big problems, but it is the only way to
rehabilitate the sector and the benefit for years to come. The most promising
market for Armenian exports is Russia. Afterwards we will consider entering the
European and eastern markets.

 

The shop mostly offers inexpensive knitted
clothes. To all appearances, you hoped to attract more customers this way… 

 

Yes, we did
not want to frighten the citizens with high prices.  They say, appetite
comes with eating, and now we are already thinking to manufacture up-market
goods.  

 

What about the technological infrastructure of
the companies? Are they ready to manufacture up-market clothes? 

 

They are ready to supply high-quality clothes of the mid-range
segment. However, to launch production of up-market clothes, the companies
should strengthen their material and technical base. In light industry
technical re-equipment needs no big investments. Here one should not wait for
depreciation of equipment, new technologies should be introduced in the
production as soon as they emerge. This is the pledge of competitiveness in the
foreign markets and the Government can provide essential support by creating a
special Fund to finance the needs of “light” industrialists, thereby bypassing
the banks whose interest rates are too high for small enterprises. The Diaspora can also contribute to promotion
of the Armenian brand. Next year the Union of Light Industry Employers and the
Diaspora Ministry are going to organize a joint forum. Businessmen from the
Armenian Diaspora will take part in the forum. I assure you, as soon as the Armenian
brand becomes recognizable abroad, it will become popular in the domestic
market as well. It is also necessary to explain to the citizens that the
quality of the Armenian clothes is not worse than that of the European ones.     

 

And the last question. Are you pleased with the sales
in the shop? 

 

Given that
we have spent almost no money on advertising, we are unambiguously pleased.
Over the past two months the sales in the shop amounted to 10mln AMD, which is
more than we expected. 

 

Thanks for
the interview.