VZCZCXYZ0001
RR RUEHWEB

DE RUEHAS #1475/01 2831432
ZNR UUUUU ZZH
R 101432Z OCT 07
FM AMEMBASSY ALGIERS
TO RUEHC/SECSTATE WASHDC 4641
INFO RUEHFR/AMEMBASSY PARIS 2367
RUEHLO/AMEMBASSY LONDON 1733
RUEHRB/AMEMBASSY RABAT 1968
RUEHTU/AMEMBASSY TUNIS 6820
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS ALGIERS 001475 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EEB/TPP/ABT (G. CLEMENTS) 
COMMERCE FOR ITA/OTEXA (M. D'ANDREA) 
STATE PLEASE PASS USTR (C. MILLER) 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KTEX AG
 
SUBJECT: ALGERIA WRITES OFF TEXTILE INDUSTRY 
 
REF: A. 06 ALGIERS 01112 
 ¶B. SECSTATE 114799 
 
¶1. SUMMARY:  An estimated 95 percent of apparel in Algeria is 
imported and the remaining few home-grown firms in this sector are 
nearing extinction in the face of cheaper imports, both legitimate 
and counterfeit.  As Algerians' cost of living rises faster than 
wages, consumers have flocked to inexpensive imported apparel to the 
detriment of domestic producers, who have witnessed the closure of 
70 percent of privately held textile firms in recent years.  Niche 
markets, such as carpets and reasonably priced quality apparel that 
appeal to Algerian aesthetics, have been able to escape the wave of 
cheap imports, but the Algerian government appears to have all but 
given up on preserving its textile sector as it presses on with its 
economic reform program.  END SUMMARY. 
 
OFFICIAL STATISTICS 
------------------- 
 
¶2.  Over 95 percent of Algeria's textile consumption is imported, 
according the Algerian Office of National Statistics (ONS).  ONS 
estimates that the textile sector accounts for 4.42 percent of 
Algeria's non-hydrocarbon industrial production.  Algeria's 
industrial sector employs 1.26 million workers, including roughly 
55,000 workers in textile-related industries.  Algeria's apparel 
imports reached USD 321 million in the first half of 2007, while 
2006 imports were USD 924 million.  Concrete numbers regarding the 
origin of imports are difficult to obtain given the informal nature 
of much of this trade, but the ONS estimates that about 40 percent 
of the imports come from China, 40 percent from Syria, and 20 
percent from Turkey.  With the exception of some rugs and 
handicrafts sold in Algeria's niche tourism sector, the country 
effectively has no textile exports. 
 
CHINESE TEXTILES ABOUND 
----------------------- 
 
¶3.  Since 2000, Algeria has witnessed a flood of inexpensive, 
low-quality Chinese textiles that local consumers have been unable 
to resist given a rising cost of living that continues to outpace 
wage and job growth (Ref A).  At the sprawling Premier Mai market in 
central Algiers, Chinese-made T-shirts cost as little as 200 dinars 
(about $3) and sneakers go for 700 ($10.50).  In a market known as 
the Dubai Bazaar, hundreds of stalls sell Chinese-made textiles at a 
fraction of what consumers once paid for locally produced items. 
While official price statistics are not available, embassy FSN staff 
noted that on average prices have dropped 20 to 40 percent since the 
influx of imported goods began.  The greatest price drops have been 
seen in men's clothing, particularly blue jeans. 
 
POST-SOCIALIST INDUSTRIAL DECLINE 
--------------------------------- 
 
¶4.  Under Algeria's post-independence socialist experiment, the 
country supported limited textile production until the first wave of 
economic reforms in the late 1980s and early 1990s rendered Algerian 
production obsolete.  Algeria produced some "downstream" textile 
items by importing raw materials and assembling clothes for the 
local market.  Such local production, under the aegis of state-run 
companies Districh and Ecotext, accounted for approximately 60 
percent of the Algerian apparel market through the 1980s.  Beginning 
in the late 1980s and early 1990s, the combination of economic 
liberalization and a new wave of predominantly Taiwanese imports 
drastically cut the share of textile products finished within 
Algeria and, to a greater extent, the role of Algerian state-run 
industries.  Local Algerian production now stands at just 5 percent 
of the market.  Of this paltry domestic production, the public 
sector share in the market dropped from 64 percent in 1999 to 16 
percent in 2001, according to the Office of National Statistics. 
Public sector textile manufacturing accounts for less than 10 
percent of the local market today. 
 
SOME NICHES SURVIVE 
------------------- 
 
¶5.  The few "downstream" clothing manufacturers that have endured 
have done so by appealing to Algerian demands for style and quality 
at a price more reasonable than European imports.  Reda Hamiani, the 
leader of a major business association and the owner of the Algerian 
clothing brand "Redman," has carved a popular niche in the Algerian 
market.  Redman clothing appeals to the Algerian aesthetic but is 
higher quality than Chinese products and more affordable than French 
or Italian imports.  So too have Algeria's carpet makers, who hail 
mostly from southern cities such as Ghardaia and Msila, been able to 
survive by selling their wares to predominantly European tourists. 
 
COMMENT:  INDUSTRIAL STRATEGY ABANDONS TEXTILES 
--------------------------------------------- -- 
 
¶6.  Privatization and Industry Minister Abdelhamid Temmar released 
in July 2006 an industrial strategy program that notably neglected 
to mention textile production, in effect relegating the sector to 
the dustbin of Algerian development policy along with 
import-substitution, state-run electronics manufacturing and 
five-year development plans.  For the roughly 3500 domestic textile 
outlets that have closed in the last decade, the government has 
developed no program for retraining their workers.  While the 
effects of this strategy may be muted because of the small scale of 
Algeria's textile sector, this lack of long-term planning does not 
bode well for future disruptions that will likely be unleashed 
during the privatization of other more labor intensive sectors. 
 
FORD