The company has nine official suppliers, which in turn manufacture the products in their own facilities and in those of their subcontractors.
H&M’s partners are usually large companies with hundreds or even more than 1,000 employees, which generate tens or hundreds of millions of lei in revenue.
Businesses like Artifex, Pandora Prod and Time International Trading have some of the leading fashion retailers of the world as their customers so they were among Romania’s 500 largest exporters in 2014.
Then there are the small factories they subcontract work to, which employ dozens of people and make several million lei in revenue. Subcontractors only work under toll manufacturing contracts, a business with a low value added.
All local manufacturers used to work under toll manufacturing contracts at first, which meant the retailers sent both the fabric and the pattern and anything else needed and the supplier carried out the work. Once the market developed, some manufacturers started to ‘design’ some of the clothes and send their designs to the retailer for approval. Once approved, the plant chooses the fabric and other necessary materials itself. This drove value added up, turning the companies into some of the largest employers. Those companies include Romanita, Ottorose and Pandora Prod. The small manufacturers continue to work under toll manufacturing contracts.
A small manufacturer like Vidalex Prod based in Buzau has about 40 employees, who earned an average gross wage of RON1,059 (EUR240) per month or RON783 in net amount, a little more than the minimum wage, in mid last year.
On the other hand, Caracal-based Romanita pays its employees almost double as much, RON2,081, according to publicly available data. It has more than 1,000 employees. The same goes for Pandora Prod, which has the same number of employees.
Pandora Prod, which has been in business for almost two decades, managed to grow its business 2.5 times during the crisis, following its decision to drop mass-market customers and go for luxury retailers instead.
Back in 2008, when the crisis started, it had three plants doing toll manufacturing, so the owner decided to switch to integrated products. This means it gets a drawing from the customer and takes over from there, designing and developing the product and choosing the fabric and accessories, as Dorel Boris Simiz, who runs Pandora Prod with his family said a while ago. The company also takes care of the shipping to the customers, having reached agreements with carriers.
Pandora Prod is currently working for Ted Baker, Cos (H&M’s high-end brand), Hugo boss, Comptoir de Cotonniers, Massimo Dutti and others, according to the latest data available. Gross wage in the company had reached almost RON2,200 in mid last year, 50% higher than in 2008.
(English version by Loredana Fratila-Cristescu)