Spain feeling the heat from imports
Casual Living Staff -- Casual Living, January 19, 2004
Spanish suppliers exhibiting at the Textilhogar trade show here share the same concerns as their U.S. counterparts — competition heating up from China, India, Pakistan and Turkey, as well as impending free trade in 2005. Other issues plaguing countries exporting products to the United States include uncomfortably high tax rates and a very weak dollar.
According to Ignacio Soucheiron, who handles sales for Spanish manufacturer Reig Marti, the U.S. dollar being so low has been a big problem, resulting in 30 to 35 percent higher costs.
Even though executives at Reig Marti said Spain has seen a flood of new products coming from Asia at lower prices, quality of the goods has been lower. "Retailers have had problems with quality issues when working with these countries," he added.
Conversely, Spanish suppliers such as Jover, say the home textiles business is doing fairly well, better than in some European nations. "We attribute this to Spain's prices for textile products being right at the level they should be — in the middle," added Oscar Jover, export manager at fabric producer Jover.
"The U.S. dollar being so low affects business a lot, because it indirectly increases your price and causes you to lose sales. We have to look for other markets to help us make up for loses on exports to the U.S., Canada and Mexico," added Antonio Sancho, commercial director for Colortex, a printing, dyeing, finishing and coding plant based in Valencia.
Sancho explained that European products should remain focused on better quality and difference in design, especially in light of quotas being lifted in 2005.
Jose Revert, president of the Home Textiles from Spain Association and managing director of Revert, a local textile manufacturer, said that eastern competition until now has been for low- and mid-priced products — areas where Europe really can't compete in his opinion.
"What we must do is concentrate our efforts in a better way that focuses on quality," explained Revert. He added that the U.S. still represents a pending market for his company, and even though he has invested in the market, the amount of sales were never enough to justify the costs.
"Today with the lower U.S. dollar exchange rate, it is better for us to forget about working with the U.S. until the situation improves," he said. "Suppliers are having a lot of problems holding onto markets that operate using the U.S. dollar."
Cristina Sanjuan, business manager for Valencian manufacturer Atrivm — the country's top towel supplier and in the Top 5 for bedding — said that after Sept. 11, business with the United States went down, so the company changed its strategy to maintain the levels of its brands. "We are trying to get our U.S. business up and running again," said Sanjuan. "The weak dollar has affected the export business and we have tried to be more flexible in our financial dealings with them."
Sanjuan believes that the type of companies that have been most affected by the competition coming from Asia are those focused entirely on price. "We are more concentrated on quality and design and more novelty products," she said. "We have tried to protect against this through marketing and building an image for our brands. But we still have to pay attention to these countries, because they are getting better and faster."
She continued that because of this competition, her company has become faster in terms of turnaround and product development. "The situation now is really a war based on talent and creativity as opposed to price. This is how we have dealt with foreign competition, because we can't compete on price," she said. "You have to use your strength in the market to always be one or two steps ahead. If you play your cards correctly, you will be able to maintain your position."
Laura Panizza, in exports for Manuel Romero, a Spanish jacquard producer for upholstery and decoration, added that business with the United States has decreased in the last few years, due to reasons including the lower value of the dollar.
"I think China has been working on improving its quality in the last few years," said Panizza. "Technology has also been getting better and better there."
Export manager Enric Saavedra at Barcelona-based fabric manufacturer Sati said that local companies are having problems as a result of the Euro being so high. "This has impacted our export business, especially in South America and the U.S. The year has also been a bit strange because of the war in Iraq and SARS," said Saavedra. He added that Sati competes not by selling mass quantities of products, but by focusing on service, delivery, quality and equipment.
Local manufacturer Textile Vilber has also experienced problems caused by the high Euro. "In Latin America, our customers have been complaining about having to buy in Euros because prices are 30 to 40 percent higher for them," explained Sonia Navarro, who handles Latin American and Asian export markets.
"They want us to give them a 25 percent discount, which we can't afford to do. We have been very flexible with our customers, but anticipate that we'll get smaller orders as a result."
Textile Vilber only recently started selling all of its products in euros worldwide, in order to help clients.
Navarro added that China is catching up in terms of design.
"They won't always stay cheap as their standards improve in the next five to 10 years," she said. Navarro added this is why her company focuses on design and marketing and launches different collections throughout the year to keep its European looks fresh.
High-end fabric producer and retailer out of Madrid, Gaston y Daniela, whose largest market outside of Spain is the United States, reports that the high euro and low dollar hasn't hurt the company yet, but no one really knows how long the situation will last. Executives said the company publishes its prices once a year and can't change them in accordance with the exchange rate. The company will not base its business dealings on this factor.
Juan Gonzalez, export area manager for Aznar Textile in Valencia, added, "We've had to negotiate for more aggressive prices in euros to get our customers adjusted to doing business in this currency since July 2003."
Gonzalez said that his customers get special services from the company for dealing in euros. Aznar has been preparing strategies since the introduction of the euro.