For decades, the procurement of cotton in Uzbekistan was considered risky, since in most cases child or forced labor was used to harvest it by hand. In 2009, more than 300 international brands – including Burberry, Puma, Gucci and Adidas – joined forces in the Cotton Campaign and announced a boycott of Uzbek cotton products.
This hurt, especially financially, and the country’s leadership took the turning away from their hard-earned cotton as an opportunity to make great efforts and changes: forced labor on cotton plantations was penalized, cotton cultivation was modernized and the wages of the cotton pickers increased or increased introduced a minimum wage.
Then, in March of this year, the International Labor Organization (ILO) confirmed that Uzbekistan had managed to completely eliminate forced and child labor from the cotton production cycle, and the Cotton Campaign lifted its global boycott of Uzbek cotton. The ILO advocates that international clients get involved in the country again and expects international companies and retail chains to buy Uzbek cotton again.
Cotton cultivation in Uzbekistan has a long tradition
Cotton cultivation in Uzbekistan has a long history that began with Chinese merchants who brought the first varieties of cotton to the region more than 2,000 years ago. That is why it is also called “white gold” there, because cotton has always been one of the most important export goods alongside gold.
Now the country seems to be on the road to success and could become an alternative to China, especially in view of the restructuring of international supply chains that is currently taking place. The Uzbek textile industry is now one of the leading branches of industry in the country again and employed around 350,000 people in 2021. The growth rates of textile exports doubled in 2021 compared to the previous year and reached 3 billion US dollars. An export volume of 3.8 to 4.3 billion US dollars is expected for 2022 or 7 billion US dollars by 2025, which would put Uzbekistan on a par with countries such as Sri Lanka or Pakistan.
Uzbekistan on course for growth
In total, there are more than 130 cotton-growing, ginning and processing economic clusters across Uzbekistan, which account for nearly 18 percent of annual cotton production. As a result, fiber processing increased 2.5-fold in just two years – while only 45 percent of cotton fibers were processed domestically in 2016, four years later it was already almost 90 percent.
According to official information, the share of the textile industry in the gross domestic product was around three percent in the third quarter of 2019 alone and more than 40 percent in the production of non-food consumer goods. Annual production growth has been around 18 percent in recent years, exports around 10 percent, and in the first quarter of 2021 alone the industry expanded by 38 percent year-on-year.
The German textile industry is also interested in Uzbekistan
According to a statement by the Berlin correspondent’s office, the German textile industry is also interested in the country, which, in addition to raw materials, also attracts with low production costs, a motivated workforce and many years of production experience. In addition, Uzbekistan has been a member of the EU’s Generalized System of Preferences (GSP+) since April 2021 last year, which means economic incentives such as lower export taxes. These facilitate foreign trade and experts are expected to reach annual exports to the EU of up to 250 million US dollars in 2022.
“The interest of German business in Uzbekistan has increased significantly in recent years. The textile industry has always been one of the most attractive sectors of the Uzbek economy. Investments in the sector offer German suppliers enormous opportunities, such as mechanical engineering,” says Christian Tegethoff, founder and managing director of CT Executive Search.
“Due to its relatively large population and favorable geographic location close to China, Uzbekistan also has potential as a production location. However, investors should pursue a forward-looking personnel policy and consider that training and further education requires considerable resources. Skilled workers in particular are rare and often have to be trained by the companies themselves,” advises Tegethoff.
Accordingly, the textile institute in Tashkent is currently introducing a dual training system based on the German model, according to the Berlin correspondent’s office: students study three days a week and do practical training in a textile technology park the rest of the time. In addition, more than 30 Uzbek textile manufacturers took part in the recently ended Heimtextil trade fair and introduced themselves.
“Uzbek manufacturers have conducted a number of successful negotiations with foreign business partners and signed export contracts with German, Czech, Polish and Turkish companies. Global brands such as C&A, s.Oliver, Falke, Triumph, Biberna and others are also eyeing the Uzbek market with great interest. This is evidenced by successful business talks between a high-ranking Uzbek delegation and representatives of these companies, which took place in Germany in mid-June,” reports the office.
“Uzbekistan has a firm place in the cotton and textile industry on the world market. The demand for Uzbek quality yarns is increasing,” sums up Biberna CEO Ludwig Schmänk.