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Executives from Valentino, Ferragamo and Zegna visit Cairo to size up manufacturing possibilities
A Valentino suit made in Egypt? For the droves of upper-class Egyptians who make occasional pilgrimages to London, Dubai or Italy itself in search of new threads, it may not seem possible. In fact, it is already happening, although the chic apparel is destined for the export market for the time being.
For the past four years, the Valentino Fashion Group, leaders in the luxury goods market and owners of the brands Valentino, Hugo Boss and M Missoni, have been outsourcing 1% of their menswear production to Egypt.
“We have had a very satisfactory relationship with the Arafa Group for several years now,” says Michele Norsa, chief executive officer for Valentino Fashion Group. “What we manufacture here is small from our point of view [around 100,000 suits out of the 30 million-plus that the group produces annually], but there is a big potential for developing production from Egypt. We would also like to look into opportunities to develop the retail market here, so we are currently looking for real estate investments in the top locations and we hope to see something develop within the next two to three years.”
Norsa, along with a delegation of three other high-profile executives representing top Italian fashion houses Ferragamo and Zegna and leading textile producer Marioboselli, visited Egypt last month to look into both sourcing and retail possibilities.
“Egypt and Italy are part of the same area,” says Paolo Zegna, CEO of Ermenegildo Zegna Group and the third generation of the family that created the menswear empire. “We are both traditional textile exporters, and I think we are both open to the new challenges created by a revolution that is currently taking place in our industry worldwide.”
Since the total elimination of barriers to textile and ready-made garment trade in January 2005 under the WTO, the Italian apparel and textiles industry has been facing a tough time, particularly in the lower end of the market, because of competition from China.
“The apparel sector in Italy is still a major one, but we have started thinking about what is going to happen to the future of our industry due to these changes,” says Zegna. “We are opening ourselves up to know more about what is happening around the world, and that’s why we have come to Egypt to explore future possibilities for collaboration.
“The cost of labor in Italy is extremely high, and thus it is increasingly difficult for us to compete. In certain cases, we have to move part of our production. Egypt could be a privileged partner because of the long tradition it has in manufacturing garments and textiles. Its geographical proximity to Italy is also a very big plus,” he adds.
Zegna currently produces in Italy, Spain and Switzerland. Outside the European Union, the group has a shirt factory in Turkey and a facility in Mexico that produces suits. It is also in the process of finalizing a joint venture with a Chinese company to produce a new mid-market label for the Chinese market.
Both Zegna and Norsa acknowledge the fact that the only major obstacle that stands in the way of sourcing from Egypt is a psychological one on the part of both corporations and consumers.
“What we currently manufacture in Egypt is sold mainly in Italy and other European countries,” says Norsa. “But in the United States, Japan and Gulf countries, for example, they want a ‘Made in Italy’ label to guarantee top quality,” says Norsa. “This is much less of a problem in Europe. We can accept a ‘Made in Egypt’ label much easier than a ‘Made in China’ label.”
According to Zegna, there is currently no law in Europe that requires a ‘made in’ label to be placed on garments, which has been working against companies like his that manufacture primarily inside the EU.
“We are currently lobbying to have a compulsory label of origin on all garments sold in Europe,” he says. “It is not only a way of protecting our local industries, but also a way to be transparent with the consumer.”
Norsa admits that the issue is also quality itself, not only the image of quality. “But that does not mean that quality can not be achieved by working closely with the factories in Egypt,” the CEO adds. “It just takes time. Most of the production that comes from Egypt for the time being is not for top-of-the-line luxury products.”
“Egypt is approaching a completely new phase in its industrial development,” says Magdy Tolba, a leading garments exporter and the head of the Ministry of Trade and Industry’s Ready Made Garment Export Council. “The private sector is now responsible for the planning and strategic future of the garment industry. We are working on an aggressive plan to boost garment exports from nearly $1 billion to $3.5 billion by 2009. The luxury-goods market is a relatively new area that we can easily tap into. We have tried to explain all the possibilities to our Italian partners and we have been very clear on both the positives and negatives —and the latter are now minimal. We look forward to more cooperation for the benefit of both countries.”
“I think that the future of the luxury industry is in the emerging markets, both in terms of manufacturing and retail,” says Norsa. “Wherever there is a big city like Cairo, there is infrastructure and a good quality of people who know luxury products. So this is a big market for us.”
A delegation of Egyptian ready-made garment producers will be meeting with the representatives of the Italian fashion houses once again in Florence this coming June for further talks.
Posts: 184 | Registered: Mar 2006
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My friend in Amman has been making suits for Versace for years now ... of course he ships them without the "Made in" label. That gets stitched on as soon as the suits arrive in Italy, where naturally it reads "Made in Italy".
A bunch of thieves ... this article is nothing but propaganda.
Posts: 2049 | From: Canada | Registered: Nov 2005
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