Sultan Bayezid II knew what he was doing when, in the late 15th century, he ordered the construction of the great Koz Khan, a caravanserai (a large inn and warehouse for silk merchants and their goods) in Bursa, then the capital of the Ottoman Empire. Koz Khan became the main gathering place for merchants, the place where silk was sold, stored and exchanged, and Bursa became the center of the Ottoman Empire’s silk industry.

Koz Khan still exists today. In its courtyard, visitors enjoy semolina halwa with ice cream, and the galleries are full of shops offering silk scarves. However, the sector for which Kos Khan was created is in deep crisis today. Although Turkey remains among the world’s largest textile suppliers, its share of the global market has fallen below three percent, the lowest in more than three decades. Garment exports from Bangladesh and Vietnam, some of Turkey’s biggest competitors, grew at double-digit rates in the first half of 2025 compared to the same period last year. Turkish exports fell by 6.9 percent.

Exports have fallen for the third year in a row; from a peak of $22 billion in 2022 to a projected $17 billion this year, a 23 percent decline. It is estimated that more than 310,000 workers in the textile and clothing industry lost their jobs, and about 6,000 companies closed. Hundreds more were displaced, mostly to Egypt.

The main reason is the general state of the Turkish economy. Although extremely high interest rates and an overvalued currency have reduced inflation, which was close to triple digits three years ago, it still stands at a high of 33 percent. But this combination of anti-inflation measures also raised labor and production costs, which seriously damaged the sector’s competitiveness. Since the beginning of 2022, the minimum wage in Turkey has increased from $383 to $620, an increase of more than 60 percent. Exporters, who previously benefited from low interest rates, are now under pressure. Turkish products have always been more expensive than those from China or India, says Mustafa Gültepe, president of the Turkish Exporters Association, but they make up for the price difference with quality. Today, this is no longer the case.

“European buyers chose us even when we were 15 or 20 percent more expensive,” says Gültepe. “But not today, when the difference is 50 percent.” As a result, foreign orders are being redirected to Asia. Exports from China to the EU, already China’s largest buyer of textiles and clothing, rose 20 percent in the first half of the year.

Over the past decade, parts of the sector have relied on migrant and refugee labor. But things are changing here too. It is estimated that between 250,000 and 400,000 Syrians, many of them poorly paid, worked in Turkish workshops and factories. But since the end of Syria’s bloody civil war and the fall of the Assad regime last December, up to 20 percent of them have returned home, estimates Muzaffer Cevizli, head of Giyimkent, a majority center in Turkey.

The crisis is not harmless. Even when Turkey finally catches up after years of inflation and economic mismanagement, it will be difficult for the industry to get back on track. Work is becoming more and more expensive, but at the same time more and more rare. Turkish textile companies have difficulty finding workers, even when they offer competitive wages, says Muzaffer Cevizli. “It is understandable that young people today would rather choose an office job than work in a factory,” he adds.

Mass production may have to become a thing of the past and the focus should shift to branding, design, fast delivery and specialized (special) products. As one industry source recently put it: “Turkey should stop trying to become the ‘China of Europe'”.

Moving production abroad could also be one of the solutions. Some of the most famous Turkish brands, including Eroğlu and LC Waikiki, have already moved part of their production to Egypt. It is possible that others will have to follow suit. The sector still has potential for recovery and growth, but first it will have to reinvent itself, writes The Economist. /tesheshi.com/

Kaynak: prizrenpost