ZF considered only the business of brands that have their own manufacturing operations in Romania.
Ten fashion giants including Louis Vuitton, Calzedonia and Moncler, have their own plants in Romania, where 6,500 people make 1.3 billion (EUR275 million) worth of apparel and footwear. The performance of their local operations varies, so while Louis Vuitton hired more than 200 people in 2018 and saw its revenue grow by 50%, Switzerland’s Rieker announced it would drop production in Romania.
More and more brands are dropping local manufacturing operations as the rise in minimum wage and implicitly of the textile, footwear and apparel manufacturing wage has turned Romania into a too expensive destination. Net average wage in the industry rose from RON750 to RON1,600-RON1,800 in 2008-2018, but is still up to 40% lower than the national average.
Publicly available financial data show the luxury brands which can afford to pay higher wages continue to see the Romanian market as a good manufacturing option. Mass-market brands, on the other hand, are moving to Asia and Northern Africa.(EUR1=RON4.7301)
(English version by Loredana Fratila-Cristescu)