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BELOW IS ARMINFO'S INTERVIEW WITH HOVSEP POGHOSYAN, CO-CHAIRMAN OF THE UNION OF LIGHT INDUSTRY EMPLOYERS, DIRECTOR OF THE MADE IN ARMENIA SHOP
by Elita Babayan
Tuesday, August 27, 10:11
Armenians have always been good at making clothes and shoes, but it
is getting more and more difficult to maintain these folk crafts in
the globalizing world. Zara, Hugo Boss, Levi's, Armani and other world
known brands overshadow the local little known trademarks and endanger
the further vitality of the centuries-old traditions. The Armenian
light industry, which was once widely developed, has undeservedly
fallen into oblivion. Meanwhile, it is able and it has been able
to maintain hundreds of thousands of families for many years. The
authorities started speaking of rehabilitation of this sector in
2010 and only now we hear the faint echo of their promises. A Made in
Armenia shop has recently opened in Yerevan and become a real ray of
light in the realm of darkness. The shop represents several Armenian
brands. According to the founders of the shop, it is going to mark
the beginning of big achievements in light industry and rehabilitate
the traditional crafts.
To start with, the Union of Light Industry Employers was registered in
Armenia in August 2011. This was the first and successful attempt to
unite the "light" industrialists. Today our Union unites 25 companies.
There are about 60 companies in the light industry sector.
Would you explain the structure of the Union? Does it allow solving
the problems of several light industry subsectors simultaneously?
To settle the problems of the sector effectively, a decision was made
to create a system of co-chairmen within the Union. I am one of the
four co-chairmen. I generalize the work of the other three co-chairmen
who manage the footwear industry, garment industry and the design of
the future samples. In addition, I have established a dialogue with
the authorities, and the Government of Armenia has adopted an export
stimulation concept, which implies development of 11 sectors of the
Armenian economy, and light industry is the seventh of them. I am
glad to say that EV Consulting has prepared a pilot project on light
industry development. The 10-year program will be finally approved
in September-October 2013.
How many workplaces will be created within the next 10 years?
The light industry sector may create 50,000 new jobs. The thing
is that the given sector is labor-intensive and mostly needs female
workers. The sector needs no big investments in innovative technologies
and this enhances its attractiveness.
50,000 jobs may almost rehabilitate the sector...
Yes, they may. We remember that during the Soviet times the light
industry sector provided 100,000-120,000 people with jobs and was
seriously represented by Armenia. In addition, our surveys have
demonstrated that the Armenian businessmen abroad are very actively
engaged in light industry, i.e. one can say that Armenians are
still interested in traditional crafts. It would be a big gap to
have independent Armenia without serious achievements in the light
industry sector.
What's the current state of the consumer goods market? It is glutted
with imported goods, isn't it?
Unfortunately, the local manufacturers' goods cover only 10% of the
domestic demand. In the meantime, the annual turnover of the consumer
goods amounts to 280 mln USD. We are set to satisfy the domestic
demand by 70% within the next few years. Along with development of
the domestic market, we will be increasing the exports to foreign
countries. Here we need to solve numerous problems connected with
the shortage of high-skilled designers...
Three years ago our officials spoke of creation of a joint
Armenian-Italian school of designers...
Yes, they did. The school should have been founded under the project
on creation of the Gyumri technopark. But those plans remained ink
on paper. Now, according to the state program on export stimulation,
the Government is going to train skilled designers abroad, but our
Union disagrees with this idea. We suggest opening an Armenian-Italian
institute of design and foreign trade. Why do we insist on it? We
are eager to create a truly Armenian brand, and only designers that
are well aware of the local traditions are able to do that. Even the
greatest designers in Italy, France or any other country are unable
to reproduce the diversity of tarazes as the element of our national
culture. There are no such specialists among the Armenian designers
either, but one can see them among the ethnographers studying the
manners, culture and traditions of nations.
What will follow the opening of the Made in Armenia shop?
We are already considering opening a new trade center under the same
name. It will offer a much larger assortment of consumer goods.
Unfortunately, I must say that buying the products of Melante or
Artsocks companies, for instance, most of our citizens do not even
know that these are Armenians brands. I think, Tosp is the only
company whose products are more or less familiar to the consumers. We
understood that problem and decided to open a small shop as a first
step. At the moment the shop offers the products of 5 local brands.
The new trade center will offer the products of 20-25 brands. The
achievements of our Union have caused the interest of jewelers,
furniture makers and perfumers as well. They also want to sell their
products under the Made in Armenia brand.
When will the new trade center open?
If we fail to open the trade center in Sept-Oct 2013, we will put
off these plans to March 2014.
How do the companies solve the problem of raw materials?
The companies are using foreign raw materials, mostly the ones imported
from Turkey. But we will shortly create a big base, which will supply
the whole sector with raw materials. Thus, we will solve one of the
urgent problems - we will gain production continuity. In the future
we will create our own raw materials base. In particular, within
the short-term outlook we are going to launch production of clothes
accessories. Afterwards, we will re-launch leather making in Armenia.
Many companies are working according to the tolling principle...
Actually, the project on light industry development implies using
tolling schemes as well, but we see no prospects here. The most
dangerous thing in tolling is that you remain interesting for the
foreign market for a few years, then your capacities deteriorate
and the investors move their productions to other countries. In the
meantime, by launching production inside the country and exporting
your own products, you create an added value, which allows solving
the problems of both technical and technological re-equipment.
Will you, nevertheless, choose this path?
Our Union does not advocate this idea. We want to enter the
international market with our own products. Certainly, it is fraught
with big problems, but it is the only way to rehabilitate the sector
and the benefit for years to come. The most promising market for
Armenian exports is Russia. Afterwards we will consider entering the
European and eastern markets.
The shop mostly offers inexpensive knitted clothes. To all appearances,
you hoped to attract more customers this way...
Yes, we did not want to frighten the citizens with high prices. They
say, appetite comes with eating, and now we are already thinking to
manufacture up-market goods.
What about the technological infrastructure of the companies? Are
they ready to manufacture up-market clothes?
They are ready to supply high-quality clothes of the mid-range
segment. However, to launch production of up-market clothes, the
companies should strengthen their material and technical base. In
light industry technical re-equipment needs no big investments. Here
one should not wait for depreciation of equipment, new technologies
should be introduced in the production as soon as they emerge. This
is the pledge of competitiveness in the foreign markets and the
Government can provide essential support by creating a special Fund
to finance the needs of "light" industrialists, thereby bypassing the
banks whose interest rates are too high for small enterprises. The
Diaspora can also contribute to promotion of the Armenian brand. Next
year the Union of Light Industry Employers and the Diaspora Ministry
are going to organize a joint forum. Businessmen from the Armenian
Diaspora will take part in the forum. I assure you, as soon as the
Armenian brand becomes recognizable abroad, it will become popular
in the domestic market as well. It is also necessary to explain to
the citizens that the quality of the Armenian clothes is not worse
than that of the European ones.
And the last question. Are you pleased with the sales in the shop?
Given that we have spent almost no money on advertising, we are
unambiguously pleased. Over the past two months the sales in the shop
amounted to 10mln AMD, which is more than we expected.
Thanks for the interview.
http://www.arminfo.am/index.cfm?objectid=94B347C0-0EDF-11E3-A3CC0EB7C0D21663
by Elita Babayan
Tuesday, August 27, 10:11
Armenians have always been good at making clothes and shoes, but it
is getting more and more difficult to maintain these folk crafts in
the globalizing world. Zara, Hugo Boss, Levi's, Armani and other world
known brands overshadow the local little known trademarks and endanger
the further vitality of the centuries-old traditions. The Armenian
light industry, which was once widely developed, has undeservedly
fallen into oblivion. Meanwhile, it is able and it has been able
to maintain hundreds of thousands of families for many years. The
authorities started speaking of rehabilitation of this sector in
2010 and only now we hear the faint echo of their promises. A Made in
Armenia shop has recently opened in Yerevan and become a real ray of
light in the realm of darkness. The shop represents several Armenian
brands. According to the founders of the shop, it is going to mark
the beginning of big achievements in light industry and rehabilitate
the traditional crafts.
To start with, the Union of Light Industry Employers was registered in
Armenia in August 2011. This was the first and successful attempt to
unite the "light" industrialists. Today our Union unites 25 companies.
There are about 60 companies in the light industry sector.
Would you explain the structure of the Union? Does it allow solving
the problems of several light industry subsectors simultaneously?
To settle the problems of the sector effectively, a decision was made
to create a system of co-chairmen within the Union. I am one of the
four co-chairmen. I generalize the work of the other three co-chairmen
who manage the footwear industry, garment industry and the design of
the future samples. In addition, I have established a dialogue with
the authorities, and the Government of Armenia has adopted an export
stimulation concept, which implies development of 11 sectors of the
Armenian economy, and light industry is the seventh of them. I am
glad to say that EV Consulting has prepared a pilot project on light
industry development. The 10-year program will be finally approved
in September-October 2013.
How many workplaces will be created within the next 10 years?
The light industry sector may create 50,000 new jobs. The thing
is that the given sector is labor-intensive and mostly needs female
workers. The sector needs no big investments in innovative technologies
and this enhances its attractiveness.
50,000 jobs may almost rehabilitate the sector...
Yes, they may. We remember that during the Soviet times the light
industry sector provided 100,000-120,000 people with jobs and was
seriously represented by Armenia. In addition, our surveys have
demonstrated that the Armenian businessmen abroad are very actively
engaged in light industry, i.e. one can say that Armenians are
still interested in traditional crafts. It would be a big gap to
have independent Armenia without serious achievements in the light
industry sector.
What's the current state of the consumer goods market? It is glutted
with imported goods, isn't it?
Unfortunately, the local manufacturers' goods cover only 10% of the
domestic demand. In the meantime, the annual turnover of the consumer
goods amounts to 280 mln USD. We are set to satisfy the domestic
demand by 70% within the next few years. Along with development of
the domestic market, we will be increasing the exports to foreign
countries. Here we need to solve numerous problems connected with
the shortage of high-skilled designers...
Three years ago our officials spoke of creation of a joint
Armenian-Italian school of designers...
Yes, they did. The school should have been founded under the project
on creation of the Gyumri technopark. But those plans remained ink
on paper. Now, according to the state program on export stimulation,
the Government is going to train skilled designers abroad, but our
Union disagrees with this idea. We suggest opening an Armenian-Italian
institute of design and foreign trade. Why do we insist on it? We
are eager to create a truly Armenian brand, and only designers that
are well aware of the local traditions are able to do that. Even the
greatest designers in Italy, France or any other country are unable
to reproduce the diversity of tarazes as the element of our national
culture. There are no such specialists among the Armenian designers
either, but one can see them among the ethnographers studying the
manners, culture and traditions of nations.
What will follow the opening of the Made in Armenia shop?
We are already considering opening a new trade center under the same
name. It will offer a much larger assortment of consumer goods.
Unfortunately, I must say that buying the products of Melante or
Artsocks companies, for instance, most of our citizens do not even
know that these are Armenians brands. I think, Tosp is the only
company whose products are more or less familiar to the consumers. We
understood that problem and decided to open a small shop as a first
step. At the moment the shop offers the products of 5 local brands.
The new trade center will offer the products of 20-25 brands. The
achievements of our Union have caused the interest of jewelers,
furniture makers and perfumers as well. They also want to sell their
products under the Made in Armenia brand.
When will the new trade center open?
If we fail to open the trade center in Sept-Oct 2013, we will put
off these plans to March 2014.
How do the companies solve the problem of raw materials?
The companies are using foreign raw materials, mostly the ones imported
from Turkey. But we will shortly create a big base, which will supply
the whole sector with raw materials. Thus, we will solve one of the
urgent problems - we will gain production continuity. In the future
we will create our own raw materials base. In particular, within
the short-term outlook we are going to launch production of clothes
accessories. Afterwards, we will re-launch leather making in Armenia.
Many companies are working according to the tolling principle...
Actually, the project on light industry development implies using
tolling schemes as well, but we see no prospects here. The most
dangerous thing in tolling is that you remain interesting for the
foreign market for a few years, then your capacities deteriorate
and the investors move their productions to other countries. In the
meantime, by launching production inside the country and exporting
your own products, you create an added value, which allows solving
the problems of both technical and technological re-equipment.
Will you, nevertheless, choose this path?
Our Union does not advocate this idea. We want to enter the
international market with our own products. Certainly, it is fraught
with big problems, but it is the only way to rehabilitate the sector
and the benefit for years to come. The most promising market for
Armenian exports is Russia. Afterwards we will consider entering the
European and eastern markets.
The shop mostly offers inexpensive knitted clothes. To all appearances,
you hoped to attract more customers this way...
Yes, we did not want to frighten the citizens with high prices. They
say, appetite comes with eating, and now we are already thinking to
manufacture up-market goods.
What about the technological infrastructure of the companies? Are
they ready to manufacture up-market clothes?
They are ready to supply high-quality clothes of the mid-range
segment. However, to launch production of up-market clothes, the
companies should strengthen their material and technical base. In
light industry technical re-equipment needs no big investments. Here
one should not wait for depreciation of equipment, new technologies
should be introduced in the production as soon as they emerge. This
is the pledge of competitiveness in the foreign markets and the
Government can provide essential support by creating a special Fund
to finance the needs of "light" industrialists, thereby bypassing the
banks whose interest rates are too high for small enterprises. The
Diaspora can also contribute to promotion of the Armenian brand. Next
year the Union of Light Industry Employers and the Diaspora Ministry
are going to organize a joint forum. Businessmen from the Armenian
Diaspora will take part in the forum. I assure you, as soon as the
Armenian brand becomes recognizable abroad, it will become popular
in the domestic market as well. It is also necessary to explain to
the citizens that the quality of the Armenian clothes is not worse
than that of the European ones.
And the last question. Are you pleased with the sales in the shop?
Given that we have spent almost no money on advertising, we are
unambiguously pleased. Over the past two months the sales in the shop
amounted to 10mln AMD, which is more than we expected.
Thanks for the interview.
http://www.arminfo.am/index.cfm?objectid=94B347C0-0EDF-11E3-A3CC0EB7C0D21663