The intensification of the conflict between Russia and Ukraine will have a great impact on Ukraine’s local textile exports, and will also affect my country’s investment. For textile people who have trade relations with Ukraine, certain measures need to be taken to deal with the foreign trade risks that have arisen.
Ukrainian textile industry
Ukraine has a population of 41.58 million and its capital is Kiev. Light industry is a weak link in its industrial field. During the former Soviet Union, Ukraine had more than 320 textile enterprises, including 3 state-owned textile enterprise complexes (Kherson Textile Complex, Chernobyl Textile Complex and Donetsk Textile Complex). Now there are only 20 textile companies in production, and the unified raw material supply base distributes raw materials according to plan, mainly cloth and its products. Ukraine is a traditional textile market, a fabric distribution center in Central and Eastern Europe, with many niche designer brands and strong domestic demand.
However, Ukrainian textiles are faced with serious shortages of raw materials, backward technology and equipment, lack of inter-enterprise cooperation and market planning, and lack of financial support. Ukraine’s geographical location determines that it is difficult to develop cotton, flax, hemp fiber, kenaf, jute, etc. in the country. Ramie, fur, cocoon silk, silk, etc. At the same time, fierce global competition, old local textile machines, and harsh financial policies also restrict the development of the textile industry. Therefore, the textiles in the Ukrainian market mainly rely on imports. Fabrics mainly come from China, Pakistan, South Korea, Turkey, and Russia. Logistics mainly pass through the Suez Canal, passing through Turkey and arriving in the Black Sea port city of Odessa. Producers in the above countries rely on favorable conditions such as advanced technical equipment and cheap labor, and their products flow into the Ukrainian market through gray channels, giving them a strong price advantage.
In 2019, 2020, and 2021, China’s textile and clothing exports to Ukraine were US$680, 660, and 760 million respectively, accounting for approximately 35-40% of Ukraine’s imports. China is Ukraine’s largest source of textile and clothing imports, and Ukraine’s textile and clothing exports The annual export volume in recent years is about US$400 million. Germany, Denmark and Italy are the main markets for Uzbekistan’s textile and clothing exports.
Ukraine has multiple traditional textile markets and is the fabric distribution center for Central and Eastern Europe. The Odessa Market, located in Odessa Oblast, is the largest and most concentrated fabric market.
For Ukraine’s local textile industry, if a war breaks out in Odessa, it will have a great impact on Ukraine’s local textile exports. In the sales structure of large Ukrainian textile enterprises, 55%-70% of products are sold in the domestic market, and 30%-45% of products are exported, and this is inseparable from large and excellent cargo ports such as Odessa and Ilyichovsk. For the EU and my country, this crisis will directly affect Ukraine’s product exports to EU countries and investment in factory construction, and will also affect the business expansion of my country’s local textile companies in Europe.
For my country’s textile workers, certain measures need to be taken to deal with the foreign trade risks that have arisen, but the most important thing is to keep a calm mind and believe that the transmission of prices in the industrial chain will take time, and they also believe in the power of big countries.
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