ЦЕПОЧКИ ДОБАВЛЕННОЙ СТОИМОСТИ НА РАЗВИВАЮЩИХСЯ РЫНКАХ
Жибек Абдыраманова1, Кен Чарман2, Ян Ванг3
1Студент докторантуры Кыргызского Национального Университета, 2Профессор менеджмента и экономического развития в Казахстанско-Британском Техническом Университете, 3Преподаватель предпринимательства в университете Норсхэмптон
ЦЕПОЧКИ ДОБАВЛЕННОЙ СТОИМОСТИ НА РАЗВИВАЮЩИХСЯ РЫНКАХ
Аннотация
Текстильный сектор является одним из основных в промышленности Кыргызстана с точки зрения производства, занятости и все больше экспорта. Текстильные кластеры развиваются и в кластерные образования, которые отражают развитость экономических условий регионов, демонстрируя определенные влияния на цепочки добавленной стоимости. Эти различия, будут описаны на примере двух регионов Кыргызстана: юга и севера. На севере республики инфраструктура более развита, есть больше возможностей, получить доступ на международные рынки (экспорт). На юге инфраструктура менее развита, и производители одежды в регионе в основном поставляют одежду на местные рынки и ближайшим соседям. Целью исследования является оценка ключевых факторов цепочки добавленной стоимости и прибыльности в текстильной отрасли в Кыргызстане, путем сравнения швейной швейной отрасли в двух регионах: юге и севере.
Ключевые слова: цепочки добавленной стоимости, швейной промышленности, производства одежды, текстиля кластера, развивающиеся страны, развивающейся экономикой.
Zhibek Abdyramanova1, Ken Charman2, Yan Wang3
1PhD research fellow in Kyrgyz National University, 2Professor of Management and Economic Development at Kazakh-British Technical University, 3Lecturer in Entrepreneurship at University of Northampton
VALUE CHAINS IN EMERGING MARKETS
Abstract
The textiles sector is one of the main industry sectors in Kyrgyzstan in terms of output, employment and increasingly exports. Textile clusters are developing and patterns in cluster formations are emerging that reflect the differing economic conditions of the regions, demonstrating particular influences on the value chain. These differences are both depicted in the two regions of Kyrgyzstan-south and north. In the north of the Republic the infrastructure is more developed, there is greater facility to access international markets (exports). In the south the infrastructure is less developed, and garment producers in the region serve mainly local niche and near-neighbour markets. The research objective is to assess the key drivers of the value chain and profitability in the textiles sector in Kyrgyzstan, by comparing the garment sewing sector in the two contrasting regions of south and north Kyrgyzstan.
Keywords: Value chain, apparel sector, apparel production, textiles cluster, developing countries, emerging economy.Introduction
Kyrgyzstan is an emerging economy in the Central Asian Region. Textiles, and in particular apparel production occupies an important place in the Kyrgyz economy and provides Russia, Kazakhstan and domestic markets with good quality apparel at affordable prices [3]. The apparel sector employs almost 250,000 people from a total population of 5 million.
In 2012, apparel production constituted more than 80 percent of light industry production, comprising over 3,000 small and medium-sized enterprises (SMEs) exporting more than 90 percent of their production to the Russian Federation and Kazakhstan [2]. Nearly 80% of firms in the textiles sector were working with customers from CIS countries on the Cutting, Making, Trimming (CMT) basis, with no design element, and very few of the producers using their own brands. There have been attempts at branding Kyrgyz apparel, for example, such brands as “Tumar” and “Dilbar” are already known on regional markets. However, those segments are considered luxury brands in terms of price, and are not mass market segments. The value-added chain in apparel production comprises imports of inexpensive yarn/fibre/fabrics from China and CMT services within the country export of finished apparel, mainly to Russia [3]. The majority of SMEs involved in the textiles cluster do not have key value-adding components, such as marketing, advertisement and branding of their production [3].
Low value adding components are relevant for the Business-to-Business model (B2B) in textile sector of Kyrgyzstan involving manufacturers and wholesalers [3]. This mainly affects the garment producers in the north.
The final products are sold in internal bazaars Kara-Suu in the South, and Dordoi on the North. In Kara-Suu (South) there are also some exports to Tajikistan and Uzbekistan but to a much lesser extent.
We are expecting there to differences in the cost and revenue structures of garment producers in the north and in the south, and the available data allows us to explain capture some of these differences.
Locational Effect
We have grouped the regional differences in profitability into a single locational effect, and put forward the following hypothesis.
There is a relationship between geographical location (South; North) and net-profitability of apparel producers.
Ability to Export
Hypothesis 1: There is a positive relationship between ability to export and levels of net profit.
There is a higher concentration of wholesalers in the north, which reduces the bargaining power of the apparel producers in the north.
Level of Competition and Profitability
The measure of competition used is the assessment of the level of competition by the apparel producers in each region. This states that there is a difference in the level of competition that the garment producers face, and there has been shown to be a significant difference in the perceived level of competition faced by garment producers with producers in the south facing perceptively less competition that those in the north. Therefore we propose the following hypothesis:
Hypothesis 2: There is a negative relationship between the competition level and net profit.
The Survey (Research Methodology)
The hypotheses are based on the conclusions drawn from the literature and the differences found in the cluster characteristics in the north and south, and then tested with data collected from the USAID survey “Status and Prospects of the Kyrgyz Garments Sewing Industry” conducted in 2011 by SIAR Company. The 70 respondents represented domestic entrepreneurs (50), traders in Dordoi (north Kyrgyzstan) and Kara-Suu (south Kyrgyzstan) markets (20) to assess the status and key drivers of cluster development in the textiles sector. The methodology of survey was based on open-ended questions which were later on coded and summarized in two databases, the entrepreneurs’ survey database and the traders’ database.
The entrepreneurs survey consists of 10 main coded blocks, which comprised geographical location, years of existence on the markets, profitability level, months without orders per year, share of net-profits from revenue, revenue per month, import of inputs and export of output, problems with inputs delivering and level of competition in segment. Both the entrepreneurs’ and traders’ survey includes seven blocks on grading of Kyrgyz apparels competitiveness on market in terms of pricing, quality, lining fabric, design, availability, advertisement and branding.
Factors influencing Entrepreneurs’ net profit in Kyrgyzstan
The following factors were analyzed based on Pearson’s chi-square finding the relationship to the level of workshops net profit. The chi-square test was mainly used for ranking the variables, to identify statistically significant socioeconomic factors that influence on net-profit of entrepreneurs The chi-squared test is used to determine whether there is a significant difference between the expected frequencies and the observed frequencies (p<0.05).
Table 1 - Description of Variables: Kyrgyz Apparel Producers
| Range | |
| Region where workshop located; South of Kyrgyzstan (0); North (1) | 0,1 |
| Existence (years) | 1-45 |
| Profitability level | 1-4 |
| Months without orders per year | 2-4 |
| Share of net-profits from revenue (1-10%; 6-60%) | 1-6 |
| Revenue per month (KGS) | 13000-95000 |
| Import of production (yes; no) | 1,0 |
| Problems with delivery of raw-materials (yes; no) | 1,0 |
| Level of competition in your segment (low-1; average-2; high-3) | 1-3 |
| Export of production (yes; no) | 1,0 |
Frequency, mean, percentage and mode are used for analyzing the value blocks of Kyrgyz apparel. There was a total of 70 respondents (south and north) who evaluated the competitiveness of Kyrgyz apparel based on the following value blocks in Table 2.
Table 2 - Description of Variables: Competiveness of Kyrgyz Apparel
| Range | |
| Kyrgyz apparel compared to substitutes in respect of price | 1-4 |
| Kyrgyz apparel compared to substitutes in respect of quality | 1-4 |
| Kyrgyz apparel compared to substitutes in respect of lining fabric | 1-4 |
| Kyrgyz apparel compared to substitutes in respect of design | 1-4 |
| Kyrgyz apparel compared to substitutes in respect of availability | 1-4 |
| Kyrgyz apparel compared to substitutes in respect of advertisement | 1-4 |
| Kyrgyz apparel comparing to substitutes in respect of branding | 1-4 |
Results
Presentation of Results
The main differences between the regions are firstly that there is a significant difference in net profit between the two regions, and that garment producers in the south are receiving greater than 10% profits that those in the south. The perceived level of competition is higher in the north than the south, and that the ability to export is significantly higher in the north than in the south.
Product Competitiveness
Descriptive Statistics on Competitiveness of Kyrgyz apparels value chain blocks
The perceived differences in garments produced in the region are shown in Table 4. There are no significant differences in the quality of the garment produced.
According to the results obtained from north perspective Kyrgyz apparel to be more competitive, than from the south. The main comparative advantage of Kyrgyz apparel is brand name “Made in Kyrgyzstan”. Even so there are very few brands originated from Kyrgyzstan, consumers both on internal and external markets like the quality and affordable price of apparels produced in Kyrgyzstan. Also in the north respondents consider the prices for Kyrgyz apparel to be very competitive.
Table 3- Perceived Differences in Competitiveness Textiles Sector; North and South Kyrgyzstan
| North | South | p-value | |
| Kyrgyz apparel compared to substitutes in respect of quality | 1.97 | 2.3 | 0.15 |
| Kyrgyz apparel compared to substitutes in respect of lining fabric | 2.6 | 2.8 | 0.192 |
| Kyrgyz apparel compared to substitutes in respect of design | 2.02 | 2.6 | 0.17 |
| Kyrgyz apparel compared to substitutes in respect marketing | 2.51 | 3.4 | 0.22 |
| Kyrgyz apparel compared to substitutes in respect of advertisement | 3.15 | 3.5 | 0.238 |
| Kyrgyz apparel compared to substitutes in respect of branding | 2.71 | 3.4 | 0.2242 |
| Kyrgyz apparel compared to substitutes in respect of branding | 0.57 | 0.8 | 0.05 |
The p-values obtained shows that there is no significant difference between two populations in north and the south of the country in respect of the grading quality of Kyrgyz apparel. All p-values are significant above or equal to 5%.
Factors influencing on entrepreneurs’ net profit
We conclude that the three key factors that influence the profitability of entrepreneurs in the apparel sector are the geography (south; north), the ability to export, and the level of competition that the entrepreneurs face. N.B. Geography may indicate a combination of quality differences between the north and south garment producers that are not captured in the level of exports and level of competition. The results are shown in Table 4.
Table 4- Factors Influencing Profitability of Kyrgyz Apparel Producers
| Value | df | p-value | |
| Region where workshop located; South of Kyrgyzstan (0); North (1) * | 12.356 | 5 | 0.030 |
| Existence (years) | 63.286 | 80 | 0.915 |
| Profitability level | 6.028 | 10 | 0.813 |
| Months without orders per year | 9.843 | 10 | 0.454 |
| Revenue per month (KGS) | 68.611 | 110 | 0.999 |
| Import of production | 1.394 | 5 | 0.925 |
| Problems with raw-materials delivering | 4.540 | 5 | 0.475 |
| Level of competition in your segment (low-1; average-2; high-3) * | 27,022 | 10 | ,003 |
| Export of production * | 11,363a | 5 | ,045 |
According to the analysis the region where the workshop is located, the level of competition in the niche (type of apparels) and the export of production significantly influence on profitability of SME garment producers.
Results of Hypothesis Testing
The following results are for each of the hypotheses developed.
The relationship between geographical location (south; north) and net-profit. There is a significant difference in the levels of profit being achieved in the south compared to the north. This is due to a combination of revenue and costs factors, simply that costs are relatively lower compared to revenues in the south than in the north.
Hypothesis 1: Relationship between workshop exporting and net profit. The role of exports has led to higher profits in the north than the south. In the south the majority of respondents are not exporting their apparel and in the North the situation is opposite, 86% of respondents from North are exporting apparel abroad. The average margin of exporters from the North of Kyrgyzstan is around 10-20%.
Hypothesis 2: Relationship between level of competition and net profit
According to the data the south has higher margin than north, thus in the south the margin is around 20-30% and on the north 10-20%. This could be explained by the fact that the north is more in B2B models working with wholesalers from Kazakhstan and Russia, rather than south providing mainly domestic consumers (B2C). To intercept such difference business-to-business marketing strategies, which may differ from the strategies deployed in the business-to-consumer industries of EMs, already deeply analyzed by available studies. Business-to-business markets have several distinctive features that heavily influence suitable and effective marketing strategies. The data can be interpreted that in the North textile SMEs are mainly involved in B2B when they are working with wholesalers, that signifies lower margin with higher volumes this is related to competition.
Disscussion and Conclusions
The research work examines theoretical background for resilience of private business in emerging economies. The textiles sector in Kyrgyzstan was dominated by around 10 large factories before the fall of the Soviet Union, but since then the sector has become fragmented, and there are few links throughout the value chain. Those who work in the north of Kyrgyzstan will have a better chance of higher profits because the infrastructure (and value chain links) is more developed in the north than in the south, and those who are able to export are likely to receive higher profits as the price they obtain will be higher.
The paper contributes a comparative study of clusters in the textile sector in two neighbouring but different regions, and identifies key drivers of cluster development, which can contribute to future research and which provides a useful study for policy aimed at developing clusters in textile and other sectors.
The crucial issues for Kyrgyz apparel is to include marketing, branding and advertisement in export markets, and this is very consistent with a cluster that is very fragmented, a lot of small businesses, individual entrepreneurs, with only a relative few of them being able to gain from a well developed value chain.
Список литературы на английском языке / References in English
- Cassia, F. & Magno, F., (2012), "Marketing issues for business-to-business firms entering emerging markets: An investigation among Italian companies in Eastern Europe", International Journal of Emerging Markets, Vol. 10 Iss 1 pp. 141-155
- Djenish, N. (2014), “Export-driven SME Development in Kyrgyzstan: The Garment Manufacturing Sector”, University of Central asia working paper
- USAID, Status and prospects of the Kyrgyz garment sewing industry 2011 conducted by SIAR, (USAID)