While the Greek textile and clothing industry still finds itself in a deep recession, a startup from the city of Thessaloniki is on a success path. Marianthi Milona takes a look at the firm's concept for success.
For over 50 years, Greece's textile and clothing industry had maintained a considerable lead over its competitors from other countries. Orders came from across Europe, be it for nylon fabrics or valuable cotton textiles. A clothing industry got established, particularly in northern Greece, in the late 19th century.
In recent years, however, special EU programs such as offering tax breaks for the industrialization of economically weak countries in the region such as Bulgaria and Romania had led to many Greek companies relocating their operations to neighboring nations. The development caused a total collapse of Greece's textile market.
Tax policy mistake
In the Balkans, Greek investors found not only cheap labor, but also another advantage in the form of better and effective tax systems than the one in Greece. And it is still the same case even today with many businesses viewing the Greek tax system as too chaotic. Furthermore, a rash of rules and regulations in Greece make it difficult for foreign companies to set up shop in the country.
Greece's tax law has been in place since 1908, but frequent changes to the law have left businesses grumbling. The law, for instance, is amended more than 100 times a year. Two years ago, a company had to pay 45 percent tax. The rate then had fallen to 16 percent until the new government introduced a 25 percent tax.
Athens finally decided to set a uniform tax rate of 26 percent. Greece's business community is never sure of how much tax they would be asked to shell out, and this hinders companies from effectively planning their investments and costs.
Loss of traditional industries
In fashion designer Christos Bibitsos' outlet, however, sewing machines are in full swing. Twenty women employees working here make everything from sewing patterns to finished men's garments. Everything is made on-site at "Modus Vivendi." Bibitsos is at the moment a very popular designer of men's underwear in Greece, and he has been present on the market for over 20 years.
"The history of the Greek textile industry is a sad one," said Bibitsos. And this despite the fact that there has traditionally been no other fabric better than Greece's, he added, stressing that "right now, the trend of companies relocating to other low-cost countries appears to be irreversible."
No secret concept for success
When the market for textiles designed by Bibitsos collapsed in Greece, he quickly oriented himself toward foreign markets. The gamble paid off for him as he had invested early in his own trademark, by creating "Modus Vivendi" in 1989.
The Greek brand's revenue has increased tenfold over the past five years, and its sales over the Internet, in particular, is seeing rapid growth. But the company's business with German wholesale and retail outlets has been anything but smooth.
"While business with English, French, US and Australian retailers is running smoothly, that with German ones lags behind," underlines Bibitsos. Consumers in Germany, in contrast, are in first place when it comes to placing orders on the Internet, the fashion designer noted, wondering what the reasons behind the German retailers' actions could be.
There is, however, an intense price war taking place on the German retail market and there is little consideration there for Bibitsos' concerns.