How Manufacturing in Eastern Europe Can Benefit Your Business
Learn how and why you should move your supply chain to this fast-growing region.
For years, we've been used to seeing "Made In China" labels on almost every product. But now, things are changing. For example, a lot of European fashion brands have relocated their production to European countries, especially in Eastern Europe.
Although the region saw drastic damages brought by wars, it is currently thriving. Countries like Slovakia, Czech Republic and Poland are some of the fastest developing countries not only in Europe, but in the world. In fact, the latter was the only country in the European Union to avoid a recession during the financial crisis in 2008. And in 2015, Poland was the fastest growing economy in post-crisis Europe, according to data of the International Monetary Fund.
Driven by the entrepreneurial spirit, Eastern European countries have succeeded in building an engine for manufacturing goods.
What are the benefits of manufacturing in Eastern Europe?
There are many examples of large companies choosing the region for their production. Volkswagen making its cars in Poland, Hyundai opening its first European factory in the Czech Republic, and Philips producing its lighting equipment in Hungary are just a few of the examples of foreign companies choosing Eastern Europe.
Although their reasons may vary, all of them benefit from this decision, not only commercially. The countries offer outstanding quality thanks to their highly educated, yet cost-competitive workforce.
In an interview I conducted with the founder of BonneGueule -- a large French fashion blog, which runs its own clothing brand -- Benoit Wojtenka said that his company decided to produce a big part of its clothes in the region because of the expertise in tailoring and technical clothing (e.g. using waterproof and breathable membrane and welded seams). What is also important for Wojtenka is the high ethical standards in Eastern European factories. Considering the issues of Asian sweatshops, Eastern Europe provides a great opportunity for companies that have high moral standards. All while maintaining low costs of production which allows brands to offer Made In Europe items at a competitive price.
Being Polish myself and knowing the conditions of domestic manufacturing, it was a no-brainer to make the products for my premium sustainable fashion brand, Blackwood, in Poland. The region offers a well-developed supply base offering companies a possibility to purchase all the materials and equipment they need effortlessly while reducing their costs and time of transportation.
The quality of the production can easily compete with the best and most established countries. Before deciding to produce in Poland, my company tried to produce our accessories in Italy. I am confident to say that Made in Poland should soon mean more than Made in Italy in the fashion industry. While many Italian factories rely on a reputation built on past success, most Eastern European factories are eager to offer high standards and do not hesitate to go the extra mile.
How much money can be saved?
On top of the other benefits, it also makes sense financially to produce in Eastern Europe.
Not only is the workforce cheaper than in the West and more qualified than in Asia, but also companies can significantly save on the costs of transportation. Shorter time of shipping the products from factories means not only lower costs, but also more flexibility.
It's not just about working with existing factories. Eastern European countries offer many incentives to attract foreign investment and encourage companies to build new factories. For example, the governments of Slovakia and Czech Republic offer up to full tax reliefs and provide job creation as well as training grants. Each country offers different incentives. It is worth learning about all of them separately.
How do I find a factory in Eastern Europe?
After the success of the partnership between Blackwood and our Polish factory, this is a question people often ask me.
Most manufacturers in the region work simultaneously with many companies at a time. It is the best option for the startups who cannot afford to build and run their own factory.
There are many ways entrepreneurs like you and me who can find a factory in the region. The first step would be to check Enterprise Europe Network, which is a registry where businesses can connect with potential new partners. Although it is aimed at European companies generally, most of the entries there are from Eastern Europe.
Europages is another portal for entrepreneurs to find factories from across Europe. It is possible to use filters and shortlist only the countries from the region.
One of the most efficient methods is to use a search engine like Google or DuckDuckGo. Bear in mind that although most of the factories have a representative speaking English, their websites might not be translated. Because of that, once you go through all the promising search results, find a friend who speaks the language of the country you are interested in, and ask her to do extra research for you. If that is not an option, Google Translate can be of great help. Although I found my factory in Poland thanks to my native tongue, I used Google Translate to find the above-mentioned factories in Italy.