(Last updated: 16 Sep 2011)

Trends and opportunities

The market

Despite a decreasing expenditure on clothing, Germany is the largest apparel market in Europe. In 2010, the textiles and fashion industry in Germany had 1,200 companies, employing 120,000 staff and generating a total turnover of €27 billion. Clothing made up 41 per cent and textiles 59 per cent of the total turnover. Technical textiles alone generated 50 per cent of industry turnover.

Germany is also the largest European Union (EU) importer and represents the biggest mail-order market in Europe with a total turnover of €30.3 billion.

Verticalisation has changed the pattern of cooperation with the industry. Major retailers are increasingly influencing production. Vertical chains are replacing independent small enterprises and competition continues to come from foreign retailers.

Classical distinctions between industry and trade are no longer as clear-cut as they previously were. Factory outlet centres and shop-in-shop systems are becoming increasingly powerful and undermining the traditional role of specialised retail traders.

An increasing volume of textiles is being sold by discounters, drugstores, supermarkets and retail chains such as Tchibo (traditionally a chain of coffee-shops which are now offering a wide range of other items including clothing and apparel).

Opportunities

Australia can be competitive with products that are outstanding and different in design, ie. products that are new and completely different from what is already available.

There is an increasing interest in fashion trends especially among younger consumers. The active sports segment will continue to expand its influence on the leisure and casual segments.

Major Australian brands such as Akubra, RM Williams, Driza-Bone and Seafolly have been well established in the market for many years. Lately, newer brands such as Spencer & Rutherford and Nobody are also making inroads into the market.

Competitive environment

Australia's main competitors are low labour-cost countries in Southern Europe, as well as Asia. In 2010, most of the imported textiles came from China, Turkey, Bangladesh and Italy.

Australian manufacturers should be aware of the costs associated with exporting such as customs duties, value-added tax and distributor margins which have a direct effect on prices of their goods and consequently their competitiveness.

Australian exporters should quote CIF (cost, insurance, freight) prices for a German port of entry when making offers to German companies.

Tariffs, regulations and customs

The EU has a harmonised trade system. Common Customs Tariff (CCT) is applicable to goods from non-EU countries, including Australia. Most duties are ad valorem (per cent), based on the GATT Valuation Code (approximate CIF value).

Before shipping any goods to Europe, you should obtain a written customs duty ruling from the local customs service. These rulings are called Binding Tariff Information (BTI). Getting a BTI is free and will prevent any conflict over customs or excise duty.

Consignments of textiles and apparel imported into Germany require a certificate of origin because certain quotas apply to low labour-cost countries.

Import duty ranges from 6.9 per cent to 13.8 per cent depending on the type of product. An import turnover tax, similar to the Value Added Tax levied on domestically produced goods, of 19 per cent applies.

For further information on import duties please visit http://ec.europa.eu/taxation_customs/dds/tarhome_en.htm

Standardisation

The Textiles and Textile Machinery Standards Committee (Textilnorm) is in charge of establishing DIN standards for textiles, clothing as well as textile machinery. The different DIN standards define the requirements, dimensions, technical terminology as well as testing standards for special areas in the textile industry. Foreign companies must ensure that their textile products conform to all relevant standards in Germany. The latest standards can be found on the EU website.

(Source: German Business Portal: Textile industry – a large market for fashionable goods)

Labelling

The German Textile Labelling Law lays the foundation for the labelling of textiles on the market. All textiles manufactured, imported and sold in Germany must bear a label indicating their raw materials composition. According to the law which applies to all textile products on the supply chain, textiles may only be sold if they possess the appropriate specification of the fibre contents, care and washing instructions as well as size in metric measurements. The Textile Labelling Law harmonises with the EU Directive 96/74/EC in order to make sure that the labelling for textile fibres and other terms used on labels and relevant documents are uniform throughout the EU.

Even though care labelling symbols are not mandatory in Germany, the National Association for Textile Care Labelling, GINETEX, has defined an internationally recognised care labelling system for textiles based on trademark symbols. These care symbols provide traders, consumers and companies with the correct information about taking care of textile products.

(Source: German Business Portal: Textile industry – a large market for fashionable goods)

Import regulations

In order to import textile products into Germany, companies must make sure that they present a certificate of origin (Ursprungszeugnis). Textiles coming from countries that have no bilateral agreements with the EU require an import license (Einfuhrgenehmigung) in order to enter Germany. Import licenses can be obtained from the Federal Office for Economics and Export Control.

Furthermore, according to the Registration, Evaluation, Authorization and Restriction of chemical products (REACH) Regulation of the European Union (1907/2006/EC), manufacturers and importers of textiles containing potentially dangerous chemicals must register these substances to the European Chemicals Agency and ensure the appropriate communication along the supply chain. The main goal of REACH is to control the safety of chemicals in consumer products, including textiles.

(Source: German Business Portal: Textile industry – a large market for fashionable goods)

Certification

The most widely used and recognised certificate of quality for textiles in Germany and the EU is the Oeko-Tex Standard 100. This voluntary certificate provides the textile and clothing industry a uniform standard for consumers who specifically aim to buy textiles that are free of harmful substances. All raw materials, intermediate and end products at all stages of production are tested and certified for compliance with the standard.

Another widely used voluntary label is the European Ecolabel. This ‘bio’ label stands for products that have been manufactured and can be recycled according to strict ecological requirements. The logo may be used after a thorough examination and certification process, on a number of different organic products including textiles. The label is awarded by independent competent bodies responsible for this seal at national level.

Marketing your products and services

Market entry

Appointment of sales agents is usually the first step for a successful market entry.

If appointing sales agents, commission in this sector generally ranges between 7 and 19 per cent, depending on merchandise price levels, sales volume and customer base.

To maximise your chances of success in Germany you should:

• Participate in a German trade fair (see examples below)
• Establish a sales office with warehousing facilities, either in Germany or another European country in order to meet short-term delivery requirements.
• Maintain your relationships in market with continuous communication
• Appoint a sales agent

The fast changing demand in the clothing market is a significant factor to be considered. Consumer preferences change rapidly and there are more seasons per year. Therefore shorter delivery times and smaller volumes of series and orders are usually demanded.

Producers of brand-name apparel should plan on substantial market penetration costs to achieve the identification required to produce high sales and margins.

Trade events 

• cpd, Düsseldorf (womenswear and accessories)
• GDS, Düsseldorf (shoes and accessories)
• Heimtextil, Frankfurt (home and contract textiles)
• Kind und Jugend, Cologne (baby and toddler)
• Outdoor Friedrichshafen, Friedrichshafen (European outdoor trade fair)

Distribution channels  

Buying cooperatives play an important role in the distribution of apparel. Large-volume buying results in price discounts, which are then passed on to the retail members.

In 2010, German mail order turned over €30.3 billion out of which €18.3 billion (60.4 per cent) were ordered through the Internet. This is another potential channel for Australian exporters. 

Links and industry contacts

Clothing and fashion–related resources

Federal Association of German Linen and Clothing Materials Industry – www.ivgt.de
Federal Association of German Textile Retailers – www.bte.de
Federal Association of the Textile Industry in Germany –  www.textil-mode.de

Federal Association of German Textile Wholesalers
Hohenzollernring 89-93
D-50672 Köln
Tel: +49 221 217 092
Fax: +49 221 212 898

Government, business and trade resources for Germany

European Union – http://europa.eu.int
European Union Customs – http://europa.eu.int/comm/taxation_customs/customs/index_en.htm
German Government – www.bundesregierung.de/en
German Federal Statistics Office – www.statistik-bund.de/e_home.htm

Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

A list of Austrade offices (in alphabetical order of country) is also available.