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In Italy, there are around 300 companies that produce textile machines and related accessories. In 2012, the value of Italian machinery production was 2.4 billion Euros, with exports amounting to 83 percent of total production. Italy has a world market share of 11 percent. The textile industry in Ethiopia is one of the key sectors, employing 20 percent of the whole workforce in the country. Last year, imports of Italian-made machinery in the country were worth about 2 million Euros.
A delegation, consisting of representatives from six Italian textile machinery manufacturing companies, made a visit to Ethiopia under the coordination of the Italian Trade Promotion Agency-ICE, the Embassy of Italy in Ethiopia and the Association of Italian Textile Machinery Manufacturers (ACIMIT). The delegation held a roundtable discussion and a business-to-business (B2B) session with local textile companies.
Capital’s Eskedar Kifle sat down with the President of ACIMIT, Raffaella Carabelli, to discuss the companies’interest in Ethiopia and the market opportunities for their products.
Capital: Please tell us the aim of your visit here?
Raffaella Carabelli: We are here representing the producers of Italian textile machinery. Italy is a big producer of, not only textile, but also textile machinery and accessories. There is of course a long history of relations between Italy and Ethiopia in various spheres, and now we are here, let’s say, to rejuvenate this relationship. The textile industry in Ethiopia is one sector, I would say, given one of the highest priorities by the government and a lot of improvements have been registered in the garment manufacturing industry during the past few years. But now manufacturers are also going upwards and starting with spinning so that they have a complete setup for the textile industry. Italian machinery manufacturers are very strong in their field starting from spinning to finishing. So today, we are here basically to better acquaint ourselves with the Ethiopian textile and garment sector and the requirements they have, and also for those involved in the sector to know us better. Italian-made machinery are technologically advanced, but also very advanced in sustainable technology, as we call it. This means they have very low power consumption, and in the case of the dyeing machine, very low water consumption. It fulfills all aspects that are becoming more and more important in the industry.
Capital: I understand your delegation is here representing six companies. Are these companies being introduced to the Ethiopian market for the first time?
Carabelli: We are all new and not new at the same time, because indirectly we have been present in the Ethiopian market, such as in projects organized by different companies or through Italian machinery that have been introduced into the market by various companies. But now, what we are doing is establishing a direct presence. I have brought with me the representatives of six companies, including mine, on behalf of a very important part of the Italian Machinery Association.
Capital: Have you been conducting similar visits to other African countries or is Ethiopia the first?
Carabelli: As ACIMIT, our machinery are sold in about 130 countries around the world, which includes involvement with other African countries as well. Ethiopia is not the first country we visited.
Capital: What is your assessment of the market in Ethiopia?
Carabelli: I would say that we are here at the right time, because as I have tried to express earlier, here in Ethiopia priority has obviously been given to producing garment due to the fact that it is labor intensive, But manufacturing garment also means that you already have the yarn and the fabric; this is the area where Ethiopia has shortcomings at the moment. So we are here to fill that gap. Ethiopia has done incredible things in this field, but now it needs to proceed to step two, which is to become independent in the preparatory part of manufacturing garment.
This is the way that manufacturers become competitive. As we have to compete with Asian countries which manufacture and sell their own machinery, you also have to compete with the rest of the world with your own quality products.
On the other hand, I see that this is also a very big market, a growing market. Ethiopia has a double-digit growth rate, which is something we can only dream of in Italy and the rest of Europe at the moment. I foresee a very important position for Ethiopia, at least in Africa, soon.
Something I was not expecting and is very positive is that the Ethiopian government is putting a lot of effort into building infrastructure. This is extremely important, because in many other textile-producing countries they first establish manufacturing companies, but then there are no roads, not enough electrical power or a system on how to get the goods to the market. Here, the approach is quite different, which is very good. There would be ample opportunities for companies to develop, not just for others to come into the country and invest, but also for local companies to expand, because they will not be difficult to reach and they have all they need to run.
This is a good combination and an excellent situation developing between the government sustaining development and local companies.
Capital: Other countries, such as India and Turkey, have been involved in the Ethiopian textile and garment manufacturing sector for a while now. They already have an established presence in the country. How do you plan to compete with those countries?
Carabelli: Well, I wouldn’t say we are the last ones to enter the market. First of all, concerning those countries, there are a lot of second-hand plants that have been transferred to Ethiopia; we are not transferring anything, but are in the business of selling machinery that have not been previously known or much used in the country. From what we understand, there are around 12 to 15 textile companies; the rest are garment companies. We specialize in textile.
That’s why I said we are here at the right time, because Ethiopia is now going into textile manufacturing. Then there is also the aspect of quality. India is also a major producer of textile machinery. We had the opportunity to visit some companies here and had the occasion to observe the machines they used, which were relatively inexpensive; but on the question of reliability and quality, plus the ability to efficiently perform, there is still a long way to go. Italy is in second place in machinery production in the world after Germany, so we are a big player in the export of machinery. Coming here, we have been informed that other countries such as China, India and Turkey are operating in the country. These countries are three major importers of Italian-made machinery themselves and one has to ask oneself why.
Capital: Cost is always an issue where machinery is involved. Are the machinery you will be introducing into the market competitive?
Carabelli: We understand that price is an important aspect when you are buying machinery, but that is not the only thing you have to look at. Like I said, the biggest importer of Italian-made machinery is China. If price was the only concern, the Chinese would not be importing so much, because there are local producers of machinery there. In every country, there are people who are only interested in looking at the price, but fortunately, there are also those who are looking into long-term investments, reliability and quality.
I would not consider price as a barrier if I’m looking to enter the global market and be competitive.
Capital: How do you plan to go about introducing your product? Have you managed to get partners here?
Carabelli: Basically, this is one of the reasons we are here. In the majority of the countries we do business with, they have organized local agents. We have noticed that this does not exist in Ethiopia. This is definitely a problem for us and others. The market is not yet organized, with agents, in a classical or standard way. Therefore, we are using this visit to contact local companies to resolve this issue.
I have to also underline that ACIMIT will be organizing a visit to Italy for an Ethiopian delegation in the future, so that company representatives will become acquainted with Italian machinery manufacturers, because it is important for people to know what is available. Like I said before, a lot of our machinery are coming into Ethiopia indirectly through the relocation of foreign plants instead of through direct purchase.
Capital: What other challenges do you anticipate you may encounter in the process?
Carabelli: Well, you know at the moment I can’t really say, as we have not visited many factories yet. After we do, then I would be in a better position to answer the question. Talking about positives though, like I said before, this sector has been given priority and it is developing. It will obviously take time, but in the near future, textile will become one of the most important and successful sectors in the country.
Ethiopia is a beautiful country with a lot of potential. You have the perfect climate to grow cotton, but this is something the country needs to get into relatively quickly; and the government should push it because, if you already have the cotton and you don’t have to import it, it would be very useful.