The following research report contains market research, analysis, statistics and business intelligence relating to research on Textiles And Apparel In Spain.

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ABSTRACT
Spain, which is one of the ten largest economies in the world, is a member of the European Union and is the fastest growing major industrialized country in the world. The Spanish economy grew 4.1% in 2000 even though there has been a slight decline after three years of growth. The textile and apparel sectors play an important role in the Spanish economy. In 2000 the sector employed 278,000 people, which represents 10% of industrial employment and 2% of total employment. The sector generated 5.5 billion USD, or 6% of industrial production and 1% of the GNP.
A. Market Overview

The textile and apparel sector in Spain hasn't been sleeping during the last three years. Growth has slowed however. Respective to the location of the industry, spinning and fabric industries are highly concentrated in the Catalonia and Valencia regions, were it represents two-thirds of employment. Apparel and stitching operations are found throughout Spain.
Small and medium size companies constitute most of this activity, with an average of 36 employees per company. 70% of all companies have less than 20 workers and big companies with more than 500 people represent only 0.2% of the total. It is thought that small companies have higher levels of flexibility so they are able to follow the latest trends in fashion, which is key to this industry.

Economic recovery in the EU has been more intense in the textile sector than in the apparel sector. Sector demand has improved thanks to export growth. Internal demand in France, Italy and Spain has grown, while in Germany and United Kingdom it has remained stable. In the EU, textile production has risen a total of 1% in all countries excluding the UK and Portugal. There have been steep declines however, in the apparel sector in countries such as France, Germany or Belgium. Spanish companies onetheless are well represented all over Europe, and also have a small presence in North and South America as well as in the Orient.
The Spanish textile sector includes a wide range of products. Most articles sold to other countries are spinning products and apparel. In 2000, imports in this sector were of 5.6 billion USD and total exports reached 4.4 billion USD which are 30 percent of the production.
Market Trends

This year textile consumption growth will decline somewhat compared to year 2000 due to diminished home consumption (3.4% real growth compared to 4.3% last year). Prices are still a source of concern, because the high price of oil has contributed to a consumer price index increase of 4%.

Clothing demand has evolved parallel to that of family consumption, with a very positive first half and a weak annual close due to seasonal conditions and less Christmas and discount sales income than previous years. Textile articles for housing and decoration have maintained good sales thanks to newly built houses, the development of the construction and the increase of tourism in Spain.

The growth of technical textile products maintained their position, especially in the automotive sector.
In the course of the year, the consumption of textile products and those of apparel have increased almost 1kg per person to 17.6 kg, which is a 5% increase in comparison to 1999. The import of clothes to Spain has grown faster than the Spanish clothing sector itself. During the first month of the year export in the textile sector has increased 13.5 percent.
As for trends for the following year, textile will be affected by the slowing down of the general consumption and the expected decrease in investment in dwellings. Exports are expected to rise 15 percent because of a foreign trade expansion effort of the companies due to a lessening in demand in the interior market. Imports are also expected to rise 15 percent.

Best Prospects

The sector has developed favorably in relation to 1999 with a growth of spinning and textile products due to the production increase of clothing products.
Also, industrial consumption of fibers increased four percent after the 1999 decrease of - 2 percent. In addition, "per capita"consumption experienced a big increase due to the strong increase in imports.

A few year 2000 highlights follow:

Spinning:

Economic activity here has been superior to that of 1999. The cotton spinning industry especially has experienced growth after a slump in 1999. The wool spinning industry saw increased demand in the first part of the year, only to slow down later in the year. The yarn sector maintained activity throughout the year.
Knitting:

This sub-sector has benefited from the recovery of foreign -especially the European- demand. The wool and cotton sub-sectors are those that have shown the biggest growth while the wool weaver sub-sector was affected by the turning away of the fashion industry in a direction to "non wool".

Home Textiles:

This production has been developing favorably due to the recovery of the foreign markets and the maintenance of Spain's internal market. Improvement in worldwide demand and increased consumption in Europe are factors that explain this development.

Apparel:

The maintenance of internal demand and increased exports resulted in good activity in this sub-sector, especially in external articles of clothing. Twenty-one percent import growth is reflective of internal demand during most if not the entire year.
Import Market

The imports have grown 17% to 6.7 billion USD. Highest growth is reported in the clothing sector with 20 percent, reflecting the vibrancy of the internal market. Spinning and textile imports have been growing 15 percent due to major activity in those sectors. The purchase of material increased 14 percent as a consequence of the raising of the average price of imports.
The EU is the main supplier of the Spanish market, even though its share is reducing slowly from almost 60 percent in 1998 to 54 percent in 2000. However, the Mediterranean countries and the Far East have increased their participation immensely. In this development Italy plays a significant role and is the main supplier with 17.6 percent of total imports. China is the main non-EU country supplier of textile products to Spain. It has surpassed Portugal in imports to Spain. It is now in third place behind France in terms of imports into Spain.

In general, imports from non-EU countries have experienced a large increase (27 percent). Imports from EU countries that only increased 10 percent increase, being the main ones: Italy, France, Portugal and Germany. The main supplier outside the EU is China. Imports from the US increased 5 percent during 2000. B. End-user analysis
Spanish women and label-conscious urban young people tend to be the prominent end-users in the apparel sector. Spanish consumers assign a great deal of importance to fashion and to care more and more about what they wear, giving special importance to brand names.
Modern western influence and the popularity of sports teams have taken hold among young people causing a demand for t-shirts, hats and other sports apparel with American sports team and university logos.
Natural materials, dark colors, comfortable styles and classic designs are the predominant characteristics in the clothes of professional Spanish women. Spanish women tend to prefer Spanish brand names such as Adolfo Dominguez, Sybilla, Pedro del Hierro, Antonio Miro, Oscar de la Renta, Roberto Verino, Agatha Ruiz de la Prada and Enrique Loewe. However, these brands only reach those consumers with high purchasing power because of their high prices. Because of this, the "Asociacion de Creadores de Moda"(Association of Fashion Designers) was founded in 1999 where ten of the most important Spanish designers share a common goal: the combination of fashion and industry in order to make higher quality clothing more affordable.
Women's spring and summer fashions tend to be similar to the casual style of the Gap and Banana Republic and can be seen in Zara Espana. Linen, cotton, wool and synthetic fibers are the main materials used in this genre of apparel.
Six out of ten Spanish women find quality to be their main motivation to buy in this sector while 30 percent feel that design is most important. Surprisingly, price is the most important factor for only 10 percent of women. A great proportion of these women (70 percent) also buy clothing for other people, mainly other family members. Almost 50 percent of men's clothes are bought by their wives and 37.4 percent of these women also purchase clothing for their sons. This percentage is reduced to only 17.2 percent with respect to daughters. The most common shopping places for Spanish apparel consumers are shopping centers, individual stores along the street and department stores.

Imports of textiles products for home/buildings have grew during last year, mainly due to the growth in the construction sector. Not only architectural design and construction companies are potential end-users, but also hotel and tourist facilities developers are good potential end-users. It is important to note that tourism is the largest industry in Spain. Spain is one of the world's top tourism destinations.
Regarding industrial textiles, one of the main end-user would be the automotive sector. Spain currently ranks as the third largest automobile manufacturer in the EU with over 3 million units, having surpassed the U.K., yet following France and Germany. In 2000, industry reports indicated that Spain finished the year as the fifth largest automobile manufacturer in the world, surpassing Korea.
C. Market Access

Overall, the import climate for American products is excellent. There are no restrictions on the importation of U.S.-made apparel/textiles products into Spain. In general, there are no specific requirements for imported products to be packaged or labeled in metric units. Nevertheless, the metric system is used extensively and neither distributors nor consumers are used to other measuring systems. For import and export reasons, some companies use other measuring systems on their labels, together with the metric units, indicating also the country of origin or destination. Therefore, they only need one type of label, indicating the sizes in different metric systems. These multi-country labels, often also include the prices in different currencies, for the different countries of destination or origin.

Clothing labels must provide the country of origin and cleaning instructions. Requirements relating to textile content, labeling, and packaging are regulated by Royal Decree 928/1987, published in the State Gazette on July 17, 1987. The decree establishes that textile and apparel products must clearly identify the manufacturer, provide the importer's tax registration number, and explicitly identify the quantity of textile materials used. The label must be written in Spanish. This regulation establishes a table on how to label specific materials and establishes specific requirements for certain apparel products.

Trademark protection in Spain favors registration. Spanish trademark law defines infringement of trademarks as unfair competition and establishes effective enforcement.
Customs duties were eliminated for trade between EU members-countries in 1993. Spain applies the current EU Common External Tariff (CXT) on imports from third countries, including the U.S. The customs duty for textile products and apparel imported from the U.S. ranges from 2.9 to 13 percent. U.S. suppliers can sometimes eliminate or reduce this disadvantage by either franchising local production to Spanish companies or by entering into joint ventures with local firms.
Additional detailed information on Custom's duties may be obtained from website: www.taric.es. Information is available in English and Spanish.

Spain, like other EU countries, has a market economy. American companies will find an open economy and free movement of capital where business profits can be transferred without restriction.

In general, foreign products are imported by irrevocable letter of credit. When there is a continued relationship between exporter and importer/distributor, other forms of payment can be negotiated.

Contract Agreement: In general a representation / distribution agreement is governed by the conditions agreed upon between the parties. Spain applies the " freedom of contract"theory by which the contracting parties may establish any stipulation, condition or undertaking provided that it does not violate Spanish law, morals or public policy.

In general, Spanish importers prefer to import from the manufacturer directly instead of through export companies.
A Value Added Tax (IVA) of 16 percent is applied in Spain on all apparel products whether produced domestically or imported.
Distribution/Business Practices

U.S. companies can sell apparel/textiles in Spain through an agent, using a distributor or by establishing a subsidiary.
High quality, imported or locally produced foreign apparel is usually and more effectively sold in small, specialty chain stores. Joint ventures are often used in view of Spain's existing industrial and trading infrastructure along with franchising which is considered an excellent means for penetrating the Spanish market. For the most part, Spanish consumers acquire their fashion goods in specialty stores, boutiques and large department stores. The large supermarket chains attract fewer buyers of apparel products. In Spain, 60 percent of the space in shopping centers is occupied by apparel and fashion accessories boutiques. Variety and quality are the characteristics that the buyers seek in the boutiques located in the shopping centers, while higher prices are the main drawback. There is a growing trend among manufacturers to create their own chain of distribution. Franchise has become a very common system for brand name distribution of fashion products and wearing apparel in Spain. The Spanish Franchise Association states that there are over 78 Spanish brand name franchises in the fashion sector with almost 3,000 boutiques. Eleven percent of Spanish franchises are in the wearing apparel and fashion sector.

Currency: U.S. companies should be aware that from January 1, 1999 to January 1, 2002, the Euro has been going through a transitory phase during which only financial transactions that do not require the physical use of bills and coins -- mainly bank operations -- are done in Euros. Circulation of Euro bills and coins begin on January 1, 2002. Spain, and 11 EU counterparts (Germany, France, Italy, Ireland, Portugal, Greece, Holland, Belgium, Luxembourg, Austria and Finland), will have a period from January 1, 2002 to February 28, 2002, in which both their country's currency and the Euro will be used simultaneously. On March 1, 2002, individual currencies will disappear and the Euro will become the official currency of these countries. Additional information on the Euro can be found in the following web page: http://www.europa.eu.int/euro.
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TRADE PROMOTION OPPORTUNITIES

Commercial Service Spain offers a wide range of products and services for U.S. companies seeking business partners in Spain. These services include up-to-date market information, assessment of a U.S. firm's product sales potential, identification of potential representatives, individual counseling, trade missions, setting up appointments with screened firms, etc.
Additional information on marketing U. S. products and services in Spain is contained in the "Country Commercial Guide"report for Spain, which is available through the U.S. Export Assistance Centers and at the website www.usatrade.com.

For Spanish textiles/apparel sector related questions and information, feel free to contact:

Carmen Adrada
American Embassy (Madrid)
PSC 61, Box 21
APO AE 09642
Tel: 34-91/564-8976; Fax: 34-91/563-0859
Fax: 34-91/564-0859
Carmen.Adrada@mail.doc.gov

DISCLAIMER
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.

$3500 USD
For the 2008 Edition

Published: 2006 August
Market: Mens Womens Childrens
Region: Spain
Industry: Textiles
Pages: 45
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