The project is all the more important since it is an investment in a sector that has suffered from plant closures in the last three to four years. Romania has been one the most important destinations for textile manufacturing in the world since the nineties, as the specialized and mainly cheap workforce and the favorable geographic location drew the attention of the major fashion groups. Few are those that entered the market directly, most of them preferring to work with local partners.
The minimum wage increase made many fashion brands see Romania as an expensive destination, so they relocated production to Asia or other lower cost countries. Employees in this sector earn the minimum wage or close to that level.
Prada’s decision to open a new production facility in Romania is because of a number of factors. First of all, this is a luxury brand that pays more than mass brands such H&M and Zara. Second, companies in the luxury industry usually have manufacturing operations in their home countries or somewhere else in Europe at most, instead of cheap destinations like Asia, to ensure a certain standard and a better quality control. They also prefer to have their own plants rather that work with toll manufacturing partners.
Prada already had a plant in Sibiu, operated by Hipic Prod Impex, so it is familiar with the market. Hipic was established in 1994 and is 80% held by Prada SPA and 20% by Andreea Sabau, according to confidas.ro financial analysis platform.
(English version by Loredana Fratila-Cristescu)