Economy, Business And Markets

Pricing Regulations for Apparel Industry Futile

Pricing Regulations for Apparel Industry FutilePricing Regulations for Apparel Industry Futile

The pricing strategies used by the textile and apparel association have not been useful so far and the pricing system is fundamentally not feasible due to the wide variety in fabrics, design and the raw material, Mehdi Mahmoudi, the adviser to the Tehran’s Association of Clothing Producers, was quoted by media as saying on Wednesday.

Mahmoudi said the determining factor in the fashion industry is the market demand and the rate of competition, emphasizing that deciding the prices for the retailers is not a practical option, as numerous factors influence the prices for different retailers.

The location of the clothing retailer and the costs they pay as rent have significant impact on the final prices, added Mahmoudi.

The high import tariffs, which were mainly imposed during the past decade aimed at protecting domestic production, have backfired. Domestic production has not only fallen short of progress, but smuggled fabric and clothing, in particular from Turkey, have resulted in the closure of companies of small textile workshops in Tehran. A considerable percentage of the foreign products in Tehran’s boutiques and many other big cities, from jeans, knitwear, lingerie to suits and shoes, are bought by clothing distributors and are then smuggled through the west and northwestern borders. At times the imported product is of lower quality and is naturally cheaper, so the customers prefer it to the one produced inside the country.

The main problems the domestic producers of clothing are dealing with include old machinery and technology in the manufacturing sector, fluctuations in currency exchange rates, and the heavy dependence on raw material imports. With all these diverse factors, the guilds cannot set precise price rates, said Mahmoudi, pointing to the difficult task of the textile association to supervise all the 13,000 clothing retailers across Tehran.  

Many textile market experts believe that the import tariffs need to be revised and by doing so, the importers would be encouraged to legally import the garments. In that case, the market would benefit from more price transparency.

Every year, between $850-$900 million worth of textile products are exported and the number could increase much further if the country can end or minimize smuggling, Golnaz Nasrollahi, the general director of the department of textile and apparel industry at the ministry of industry, mine, and trade, said lately.

She said the highest value added in the sector belongs to apparel production, without mentioning that flooring products, and not clothing, account for the majority of almost $900 million of annual textile exports. The director also expressed hope that gradual modernization of the textile factories could boost the apparel production both in terms of quality and quantity.