Ukrainian Clothing Brand Success Paves the Way to Russia
On average, a Ukrainian clothing manufacturer works under a “cut-and-make scheme,” earning about 30 cents for each piece of clothing it produces. According to the scheme, the manufacturer provides only the cheap labor, while everything else, the fabric, design and accessories, comes from abroad. Assembled goods are shipped back abroad the moment they are finished, taking the lion’s share of profits with them.
SENSUS, an Lviv-based women’s apparel manufacturer, became one of the first Ukrainian companies to challenge the status quo. To become competitive in today’s markets, the company needed outside expertise to deal with the company’s major problems, such as the lack of a clear marketing focus, poor targeting and ineffective positioning.
BIZPRO, a USAID-funded technical assistance project, identified SENSUS’ potential and selected the apparel manufacturer to participate in its enterprise-level market development program. BIZPRO experts quickly identified solutions to the company’s major problems.
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A Sensus shop displays the 2005 spring-summer collection
Credit: Photo by Tetiana Dudka |
In January 2005, BIZPRO and SENSUS signed a joint action plan aimed at increasing the company’s competitiveness in Ukraine and exploring ways to penetrate foreign markets. BIZPRO and SENSUS shared the cost of implementing the plan, with SENSUS contributing the majority of the funds. The plan stipulated development of new branding and positioning campaigns, trainings and consulting sessions for SENSUS salespeople and production managers, and business trips in search of new partners. The plan also addressed fundamental issues of creating new designs and selecting fabrics.
A highly regarded textiles and apparel expert was invited to help the company’s managers better understand the need for upgrading existing production facilities and increasing operational efficiency. He also provided recommendations for building export capacity, and specific advice on buying new equipment to enhance quality. New operation systems were introduced to improve cooperation with the company’s subcontractors (six fairly large enterprises, employing about 3,000 workers in total). Furthermore, SENSUS was able to attend an international textile industry exhibition in Paris, where the company made deals for the supply of high-quality fabrics directly from some of the world’s leading producers, thus allowing them to obtain high-quality materials at very attractive prices.
After first six months of cooperation with BIZPRO, SENSUS showed a 30 percent increase in revenue growth compared to the same period last year. By the end of 2005, the rate of revenue growth is expected to reach 100 percent. The share of exports in the company’s total output increased to 28 percent during the first six months of this year, and is expected to rise to 60 percent by the end of the year.
Moreover, SENSUS not only expanded its presence in Ukraine but also successfully ventured abroad. One of their BIZPRO-led trips to Moscow in search of potential partners resulted in the signing of an agreement with a well-known showroom, which supplies some of the trendiest Moscow boutiques and clothing stores. SENSUS also had the opportunity to present its latest line of women’s business and casual clothes to demanding Moscow wholesalers. These high-quality and contemporary designs soon found buyers. At present, the company has already signed contracts worth an estimated $400,000 for goods to be delivered to its new Russian clients by mid-September.
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