Prospects for the Textile and Clothing Industry in the Czech Republic

The textile and clothing industry in the Czech Republic accounts for 1.9% of total manufacturing activity in the country in terms of sales, and provides 5.1% of manufacturing employment. It also accounts for a significant share of exports. Some 80% of the textiles and clothing produced by the industry is sold abroad, mainly to EU countries. Czech textile and clothing firms benefit within the EU from their proximity to major markets. This gives them a distinct advantage—in an age of quick response and short fashion cycles—over their Asian competitors. Czech firms also benefit from a reputation for good quality. Labour costs are relatively low—especially in firms located close to Poland, where there are people willing to work in the Czech Republic for low wages. Czech firms also employ low cost labour originating in Mongolia, Russia and Ukraine.

The Czech textile and clothing industry is still recovering from decades of communist rule—when efforts were focused on exporting to the former Soviet bloc. When the regime broke down, the industry was privatised and firms turned once more to Western markets—helped by foreign investment from companies such as Marzotto of Italy, Schoeller Textil of Switzerland and Toray of Japan. However, faced with strong competition from Asian competitors, the industry has had to restructure and slim down extensively. Many companies have gone out of business—especially in clothing. The textile sector has also declined, but at a slower pace, and its turnover in 2007 was about four times that of clothing. Many textile firms are enjoying success by focusing on higher value products, including technical textiles, where pressure on prices is less intense than in consumer markets. Significantly, technical textiles represent the core business of four of the five biggest textile companies, namely Juta, Kordárna, Pegas and Technolen.