VZCZCXYZ0001
RR RUEHWEB

DE RUEHVB #0907 2711210
ZNR UUUUU ZZH
R 281210Z SEP 07
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC 8191
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS ZAGREB 000907 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EEB/TPP/ABT Gary A. Clement 
DEPARTMENT PASS TO USTR Carolyn Miller 
COMMERCE FOR TA/OTEXA Maria D'Andrea 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KTEX HR
 
SUBJECT: TEXTILES AND APPAREL SECTOR: CROATIA 
 
REF: STATE 114799 
 
¶1. In response to reftel, the following are the main sector data for 
the Croatian textiles and apparel industry. According to information 
from the Croatian Chamber of Economy and Central Bureau of 
Statistics: 
 
-- Total industrial production- sale value: (2005 - most recent 
official data available): $19.8 billion 
-- Total textile production- sale value: (2005 - most recent 
official data available); $800 million 
-- Textile/apparel share of Croatian imports: for 2006 was 3.7 
percent, for January-July 2007 was 3.9 percent 
-- Textile/apparel share of Croatian exports: for 2006 was 6.6 
percent, for January-July 2007 was 6.2 percent 
-- Exports in textiles and apparel to the US: (2005- most recent 
official data available) $3.24 million 
-- Total manufacturing employment (2006): 248,775 
-- Total textiles and total apparel employment (2006): 35,141 
 
¶2. According to the Croatian Chamber of Commerce, Croatian 
manufacturers reduced prices up to 50 percent due to international 
competition in 2005, but there have been no drastic cuts since. On 
average, manufacturers have had the same number of orders in recent 
years, with seasonal fluctuations and fluctuations according to 
design and fabric. There are no Asian investors among foreign 
investors in the Croatian textile sector. The three largest 
investors are Benetton (Italy), Calzedonia (Italy), and Boxmark 
(Austria). There have been incidents of company closures and 
investors pulling out of local production and, due to increasing 
competition, more are expected. According to Mirjana 
Gambiroza-Jukic, head of the Textiles Production and Processing 
Department at the Croatian Chamber of Economy, dated technology and 
greater demands for complicated apparel design have also negatively 
affected domestic producers. Some have organized their production by 
moving sewing and pressing to other countries in the region. 
 
¶3. EU measures restricting imports of textiles and apparel from 
China have helped Croatian manufacturers. Croatia has not 
unilaterally implemented any restrictions on imports from China. 
However, according to Gambiroza-Jukic, the apparel industry does not 
export a substantial amount because of strict EU rules of origin for 
textiles. Gambiroza-Jukic added that once Croatia joins the EU, the 
rules of origin will serve as a benefit for the industry. 
 
¶4. Croatia's textile industry has been under severe pressure because 
of dislocations resulting from the transition to a market economy as 
well as the growing role of Chinese production. Employment in the 
textile sector has been decreasing for several years. Experts in the 
field hope the recently drafted Textile Development Strategy will 
help maintain employment, but they do not expect an increase. 
 
¶5. In an effort to improve the situation, the GoC offers incentives 
including non-repayable financial support for environmental 
protection and incentives for worker training. While the volume of 
textile manufacturing is decreasing overall, some Croatian companies 
are attempting to find a niche in design by producing goods with 
higher added value and are exporting brands that are popular in the 
region and EU. 
 
¶6. The GoC recently drafted the Textile Development Strategy in an 
effort to strengthen the position of the textile industry in the 
country. Given the industry's decline over recent years, however, 
Post does not expect the strategy to result in serious advances. 
 
¶7. Free trade agreements between Croatia and other countries have 
helped Croatia, but have not been enough to create new export 
opportunities for the textile industry. 
 
¶8. As with many sectors of the Croatian economy, the textile 
industry lags behind foreign competition.  Companies need to make 
substantial investments in manufacturing technology and equipment to 
survive in the near term. The industry's long-term prospects remain 
uncertain. 
 
Bradtke