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Sustainable Business Strategies for Local Fashion Communities (small and

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한국의류산업학회지 pISSN 1229-2060
제20권 제1호, 2018 eISSN 2287-5743
＜연구논문＞ Fashion & Text. Res. J.
Vol. 20, No. 1, pp.22-33(2018)
https://doi.org/10.5805/SFTI.2018.20.1.22

Sustainable Business Strategies for Local Fashion Communities

(small and medium scale enterprises) in Ethiopia and Ukraine
Karan Khurana† and Kateryna Ryabchykova1)
Apparel Production, EiTEX, Bahir Dar University; Bahir Dar, Ethiopia
1)
Ukrainian Engineering and Pedagogical Academy; Kharkiv, Ukraine

Abstract : The aim of the research study is to carve sustainable business strategies for the fashion communities in Ethi-
opia and Ukraine which are suffering today due to ever-increasing share of fast fashion consumerism. Fashion houses and
international brands propagandize sustainability and consumption for better consumer base, where as originally sus-
tainable local-based craftsmen still stay in the shade. Four communities/local designers are selected from the countries
through the method of purposive sampling. Qualitative analysis is the basis of the research as we performed personal
interviews and in-depth analysis of the communities to diagnose the problems and subsequently devise the solutions. In
this research, we have studied and analyzed the problems faced by hereditary communities and ethnic designers in small
and medium scale enterprise sector from two emerging economies. After the grounding the difficulties faced we advised
strategies for sustainable future growth to the companies. The current academic literature on small and medium scale
enterprises highlights the problems and solutions for general industry sectors. This paper brings attention to fashion com-
munities and designers who promote national heritage and are struggling to survive in emerging economies due to indus-
trialization and globalization. Moreover the comparison of the two geographies is unique in nature.
Key words : fashion communities, small and medium scale enterprises (SME), fashion marketing and branding, emerging
economies, sustainable development

1. Introduction sion of offshore companies and diversified business groups estab-

lished monopolies even in the most emerging economies (Khanna
The global fashion industry (which includes clothing, textiles, et al., 2007). Moreover, outspread of online-shopping and over
1)
footwear and luxury goods) is worth an estimated $3 trillion and it globe shipping possibilities introduced new purchasing experience,
has “outperformed the overall market and every other sector across where customers can contact direct source, without correspondence
geographies for more than a decade” -more profitable than even to local suppliers. It’s, in turn, influenced customer choice making
2)
high-growth sectors like technology and telecommunications. It and dislocated balance between global and local business commu-
can’t be doubted that fashion and textile industry has played a very nities (Schoenbachler & Gordon, 2002).
important role in economic development of emerging economies as In our understanding a ‘Fashion community’ could be defined as
this sector absorb suggest a number of reasons why the clothing community of people often to be classified as small and medium
sector has played such an important role in economic development size enterprises producing a local products with a profound sense
(Brenton et al., 2007). Undoubtedly, there is an intense need of eco- of traditional aesthetics very unique is its formation. We identified
nomic empowerment to the emerging economies and the fashion that local fashion community belong to small and medium scale
sector is a very viable solution for it but in this race the traditional enterprises sector of these countries and hold a very important part
fashion communities are losing their historical glory as they are left in development of emergent economies. Small and medium-size
with a very small market share or often skewed consumers. Expan- enterprises are a very heterogeneous group which includes a wide
variety of firms – village handicraft makers, small machine shops,
†Corresponding author; Karan Khurana restaurants, and computer software firms – that possess a wide
Tel. +251-933713377
range of sophistication and skills, and operate in very different mar-
E-mail: khurana101karan@gmail.com
© 2018 (by) the authors. This article is an open access article distributed
1)
under the terms and conditions of the Creative Commons Attribution www.companiesandmarkets.com/MarketInsight/Textiles-and-Cloth-
license (http://creativecommons.org/licenses/by/3.0/), which permits unre- ing/Global-Apparel-Industry/NI7468
2)
stricted use, distribution, and reproduction in any medium, provided the www.mckinsey.com/insights/strategy/business_and_society_in_the_
original work is properly cited. coming_decades

22
 Sustainable Business Strategies for Local Fashion Communities (small and medium scale enterprises) in Ethiopia and Ukraine 23

kets and social environments. The statistical definition of SMEs 2. Literature Review
varies by country, and is usually based on the number of employees
or the value of assets (Hallberg, 2000). Moreover such a form of art 2.1. The current state of fashion Industry in Ethiopia and
or handicraft has been often identified as a geographical charac- Ukraine
teristic or indication to the countries where they are found in. Textile and clothing companies are the dominant source of
Examples here could be Murano glass from Italy or Banaras weave exports and foreign exchange in several countries. Low income and
from India and so on. However, as was mentioned by several developing countries such as Cambodia, Bangladesh, Pakistan and
authors, in many African countries, the local textile activities are Sri Lanka depend on textile and clothing exports for more than
either suffering or in near collapse despite NGOs and bi-lateral ini- 50% of total manufacturing exports (e.g. 80% in Cambodia, 83.5%
tiatives to bolster production and nurture the sector. Many textiles in Bangladesh) (Keane & Velde, 2008). There is a clear indication
with alleged indigenous prints sold to Africans who use local dress- that Ethiopia and Ukraine are moving very quickly towards mass
makers to create tunics and wraps (particularly in the west and production and joining the league of producing economies as this is
south of the continent) are now manufactured in Asia and some- one of the revenue making sector for economies.
times the prints are even designed in Europe (Dubois, 2008). Ethiopia’s economy is primarily based on agriculture (46% of
On reviewing academic literature we found out that similar prob- GDP) but over the last 5 years the government has been determined
lems appear over all developing countries; fashion communities or to diversify the exports with a priority set for strategic sectors like
SME`s often suffer from problems such as less support from gov- light manufacturing, textile and garment manufacturing. The Ethi-
ernment, financial issues, lack of exposure to enterprise and market opian textile and apparel industry has grown an average of 51%
trends, customer service and preference, quality, consistency, up to over the last 5-6 years and some 65 international textile investment
date design (Dubois, 2008; Kunkongkaphan, 2014; Ussman & projects have been licensed for foreign investors. Retailers like
Franco, 2000). Due to the stated problems developing economies H&M, Primark and Tesco have established offices in 2012 and are
lost control even over their own local market as the traditional art as buying clothing and finished products from Ethiopian manufac-
either copied or reproduced in mass quantities. In addition to all turers (Pols, 2015). Leading the Ethiopian government's long-term
economic consequences, those causes influenced degrading of vision for economic growth that taps into the country's huge poten-
national craftsmanship development and heritage oblivion. Not tial workforce and low labor costs, work is underway a network of
only that the communities are struggling to form a consistent live- specialized and vertical clothing and textile hubs across the coun-
3)
lihood but also have been extinct in the past due to side-effects of try. The Ethiopian government is on the verge of establishing the
globalization from the west. Our main research area was taking into whole value chain in the country starting from producing cotton in
consideration two main regions: Africa and Eastern Europe which the Northern Ethiopia to establishing a number of Industrial parks
are presented on example of Ethiopia and Ukraine as the authors such as Mekelle Industrial Park, Kombolcha Industrial Park (in
live and work in these countries. The authors have consulted these Northern Ethiopia), Adama Industrial Park, Dire Dawa Industrial
companies in the past and thus have formulated the problems from Park Bole Lemi II Textile Park, 4km from the main airport in the
these cases which can be used further on for other small and capital Addis Ababa. H&M along with PVH Corp, owner of the
medium size enterprises. Moreover what adds as an advantage to Calvin Klein and Tommy Hilfiger brands is an ‘anchor’ at the
this research is the fact that both the countries have a similar polit- Hawassa Industrial Park (HIP), Mekelle and Bole Lemi industrial
ical and financial situation which is described later on in the lit- parks. In the pipeline of this expansion plan Hawassa Industrial
erature review. Park (HIP) has Raymond Group (India), one of the largest inte-
While main problems, reasons and intended way of develop- grated manufacturers of worsted fabric in the world and Wuxi Jin-
ment were outlined in analyzed sources, proposed solutions still mao (China) with customers including Gap, JC Penney, Target, VF
deliver superficial and fragmented implementation. This concur- Corp, Next and Mark &Spencer on their way of building manu-
rent estimates subsisting contradiction between growing inequality facturing facilities. The government of Ethiopia hopes to bring in
of global versus local brands and imperfection of proposed uni- textile exports worth $30bn by 2025 and increase the GDP of the
versal marketing and management solutions. Above-mentioned country, household income, foreign currency and employment in
demonstrates existence of problem which we can characterize as the country by establishing these industrial parks throughout the
insufficient local strategy for marketing and management devel-
3)
opment within researching area. https://www.just-style.com/analysis/how-ethiopias-flagship-textile-
and-apparel-park-is-taking-shape_id130616.aspx
24 한국의류산업학회지 제20권 제1호, 2018년

country. name of European brand. As per imported products, mass-market

Ukrainian Economy is majorly represented by providing ser- global chains as ZARA and alliances, M&S, H&M etc. opened
vices (60% of GDP), and in past resent years import dramatically their offices in big cities and are gaining popularity among young
privilege upon export (Central Intelligence Agency). Apparel sec- and middle-aged population. Although with an average income of
tor is represented by roughly 6000 legal entities (including indi- 6475 UAH (240$) per month (National Agency of Statistics in
vidual entrepreneurs), producing different types of textile wear, Ukraine [Національна служба статистики України], 2016) and
including fur and knitted goods. However, as per estimated statis- minimum income of 1600 UAH (120 $) per month (Low about
tics, around 90% of Ukrainian apparel sector is operating in the national budget of Ukraine for year 2017 [Закон України Про
shadows or by grey schemes. The shadow economy in Ukraine has Державний бюджет України на 2017 рік], 2016), many citizens
remained fairly stable over the years. It constitutes 60% of official still can’t afford even goods proposed by mass-market global
GDP (Dzvinka, 2002). Thus, it is valid to assume that real number chains. Thus, imported products from Asia continue to expand their
of enterprises which operate in the sector outgrow much official influence on the market, some consumers also prefer second-hand
statistics. In order to survive in crisis economy some big and quality European products as alternative way to low-quality Asian
medium sized producers continue to apply “grey” schemes to opti- production. However, with growth of patriotism, social awareness
4)
mize related cost structure. As per realized production, according and development of communicative channels (Internet platforms as
to official statistics of National statistical agency of Ukraine, in Instagram, Facebook etc.), active youth began to establish local
2016 were produced and sold textile and apparel production which brands often with no legal registration or physical address, com-
quantified in 1% of all realized production in Ukraine. From those municating directly with their consumers through channels of
goods 44% were exported. However, in addition to export of textile social networks.
material and apparel production which was quantified in 508108.9 Ukraine is a case where the entrepreneurial talent by itself is not
thousand USD, there is also import of goods which reached figure enough for fast evolution of small and medium-sized enterprises.
twice as high as level of export (1113925.8 thousand USD) in 2016 Due to absent of registration, home production and comparably
(National Agency of Statistics in Ukraine [Державна служба small niche market, such brands are able to keep just 1 or 2 staff
статистики України], 2016). In general, export was mainly pre- members, keep their prices low and deliver quality products in
vailed to countries of Western Europe (France, Germany, Czech short period of time. Such schemes gained popularity both among
Republic, Poland), while import was mostly from Asian countries young entrepreneurs and consumers. Regarding local brands and
(Turkey, China, India, Cambodia, Turkmenistan etc.) In more seg- national heritage, it was outlined that Ukrainian national crafts are
regated analysis it is important to highlight that in textile produc- facing rebirth and innovation, and gaining fame on international
tion import considerably outweighs export, with raising figures of level. In addition to affordable price and high quality, consumers
just linen and hemp, realization of which is almost fully exported to also mark that such products increase their level of individuality
Europe with low level of local usage (National Agency of Statistics and social patriotism. Brands which operate by such schemes,
in Ukraine [Державна служба статистики України], 2016). As however, often struggle to expand their business on international
per apparel production, manufacturers confirm that those compa- platform due to original lack of legal rights in its’ establishment.
nies which consider extension on international level have intention
to work in high-street or haute couture segment. Such decision is 2.2. Importance of local fashion communities to emerging
mostly subjected by high price of ready product. economies
Tax system on imported textile and realization abroad often dou- In emerging economies, small business and local entrepreneurs
bles price of the product, what makes almost impossible for man- plays a tremendous role in economic and social development of the
ufacturers to keep their prices low enough to compete with global country. These enterprises largely represent a stage in industrial
manufacturers in mass market segment. Considerable amount of transition from traditional to modern technology. Entrepreneurship
Ukrainian enterprises which decide to work with European markets development is essential to solve the problem of economic devel-
regardless tax system, most of the time operate as manufacturers, opment through creating local employment, balanced area devel-
what leave them without risk as per realization of the product. opment, decentralization of economic power and diversion of
Although such approach means that they produce clothes under the profits from rich to middle class & poor. According to academic
researches (Daniels & Ngwira, 1992; Daniels & Fisseha, 1992; Fis-
4)
www.ukrexport.gov.ua/i/imgsupload/file/Ukrainian_Apparel_Market_ seha, 1991; Fisseha & McPherson, 1991) it is estimated that SMEs
Survey_en(2).pdf employ 22% of the adult population in developing countries. Many
 Sustainable Business Strategies for Local Fashion Communities (small and medium scale enterprises) in Ethiopia and Ukraine 25

local innovations go unnoticed because of innovator’s limitations work to 9.5% of employed people (6% of working age population)
in commercializing the product. If stakeholders of entrepreneurship and produced 8.6% of GDP of Ukraine (ICS, 2001). They are not
work in tandem, SMEs can grow fast. For developing country, to only providing job opportunities, but also, acting as suppliers of
promote SMEs is a winning strategy, which decentralize the wealth goods and services to large organizations, and any lack of their
more equitably compared to the large industry. SMEs create local product quality could adversely affect the competitive ability of the
employment; direct & indirect. SMEs can be feeder to the large larger organizations (Greenan et al., 1997; Parkin & Parkin, 1996;
industries. SMEs can be tool for exploiting local innovations and Rose et al., 2006; Storey, 1994). These are sufficient reason for
enhance consumer life conditions (Sapovadia, 2015). Benefits of governments and other stakeholders in development to be inter-
SMEs can extend to the external sector, through their launching of ested in micro and small enterprises.
new products. The role of the private sector, including SMEs, as
engine of growth was illustrated by the postwar recovery in Austria 3. Methodology
and Germany and by the diverging paths of Central and East Euro-
pean and Baltic countries. Most governments also recognize the As the theoretical base secondary data was analyzed (docu-
potential of SMEs to create employment and contribute to poverty ments, production and marketing statistics). Following research
eradication, although in many cases this potential is not being ful- methods was implemented:
filled (Reinecke and White, 2004). They constitute a large part of Interviews: The managers and owners of two Ethiopian and
the economy in most countries, dominate the industrial and com- Ukrainian communities/designers were polled using informal
mercial infrastructure and have significant roles in economic approach. They were asked to speak freely about problems and
growth (Curran & Blackburn, 2001;OECD, 2010; Tetteh & Burn, concerns which appear regarding their work on international mar-
2001). In addition Carrier (1994) said that the SMEs are more fer- ket. The interviews were talking separately with each community
tile than their larger counterparts in terms of innovation and devel- by researchers in their country of residence. As the initial condition
opment. With the end of the central planning system, SMEs have was proposed to speak freely about problems which communities
become the major driving force for the development of the econ- face, while more attention were devoted to their concerns about
omy in many transition countries. In Africa, Okpara (2011) argued opening international market.
that SMEs play a momentous role in the macro economy. There Additionally, we observed current business models and market-
has been an obvious rise in the widespread emergence of SMEs in ing approaches, analyzed environment, supply chain and brand
Sub-Saharan Africa. The importance of the micro and small enter- identity. Through these interviews we analyzed past, present and
prises sector in Ethiopia, particularly for the low-income, poor and future prospect of business to get full picture of analysing com-
women groups, is evident from their relatively large presence, munities.
share in employment and small capital requirement. The small and Non-participant observation: using retrospective approach, were
medium enterprises informal and small manufacturing enterprise analyzed environment and external irritants of analyzed questions.
sector (SMEs) contributed value added of Birr 8.3 million in 1996. In addition, local business model and orientation of communities in
Based on the 1992/93 data, this figure constitutes about 3.4% of the past, present and future prospects were considered.
GDP, 33% of the industrial sector’s contribution and 52% of the Model exploration: according to particular topic and contempo-
manufacturing sector’s contribution to the GDP of the same year rary scenario were analysed existing marketing approaches; were
(Amha & Ageba, 2006). The five-year Growth and Transformation taking into consideration focus on developing economies and mar-
Plan (GTP) of Ethiopia envisages to create a total of three million ket segment detached to analysed communities.
5)
micro and small scale enterprises at the end of the plan period.
SMEs in Ethiopia comprise of those having paid up capital of 3.1. Research questions
20,000-500,000 Birr (about US$4,000-100,000) and more than i. According to research aim, following questions were outlined:
500,000 Birr, respectively; or having 11-15 employees and more ii. Defining and comparing existing problems of communities
than 50, respectively. via collecting primary data.
Small and medium-size enterprises in Ukraine in 2000 gave iii. Analyze current marketing & management strategy of local
communities in Ethiopia and in Ukraine;
5)
National Bank of Ethiopia (NBE), 2011. Annual Report 2010-11. Identify and propose improved business strategy according to
Addis Ababa, Ethiopia current business models of communities and brand aims.
26 한국의류산업학회지 제20권 제1호, 2018년

3.2. A brief on Local Communities/SME`S in Ethiopia and try where women are generally subservient to men. The village is
Ukraine unique not only for its attitudes toward gender, religion, and edu-
We researched on the four SME`s/local communities which con- cation, but for the social security it provides its members in need.
tribute to fashion and textile sector in both the countries. The selec- Minna Salami (Nigerian-Finnish writer and commentator, and the
tion of the communities is based on the method of purposive founder of MsAfropolitan) suggested that environmental sustain-
sampling. Purposeful sampling is a technique widely used in qual- ability is not a goal in AwraAmba, it is a reality. What is now a nec-
itative research for the identification and selection of information- essary but catchy concept, namely “the green economy”, is not a
rich cases for the most effective use of limited resources (Patton, new idea in AwraAmba. As they cannot live on farm activities,
2002). This involves identifying and selecting individuals or given the soil poverty and the scarcity, they have diversified into
groups of individuals that are especially knowledgeable about or the weaving business, using both traditional and modern weaving
experienced with a phenomenon of interest (Cresswell & Clark, machines. They started off by building one traditional weaving
2011). The communities were selected on the basis of the impor- machine, which they used to make scarves, blankets and clothing to
tance of availability and willingness to participate, and the ability to sell. Soon they had saved enough money to buy the parts for
communicate experiences and opinions in an articulate, expressive, another machine. Their production capacity doubled and so their
and reflective manner which are the factors important for purposive operation started to grow and grow. The cottage industry produces
sampling as noted by Bernard (2002). On reviewing literature shirts, dresses, skirts, table clothes, scarfs, hats, towels, blankets
(Aidis, 1998; Aidis, 2003; Aidis, 2004; Aidis et al., 2007) on devel- and many other forms of garment using attractive design (Joumard,
opment of SME`s under women entrepreneurs we chose women 2010). Begging is an activity frowned up on, the most appropriate
entrepreneurs as we consider this to be a sensitive topic for emerg- way to contribute would be to buy some of the handspun cotton
ing economies. Hence it was taken care during the selection of the and wool items in the warehouse: - a range of “shamas”, scarps,
communities that they should be either communities with a social shirts and blankets costs half what can be paid in most other parts
message or essentially women entrepreneurs who are fashion of the country. We came to know about the community from trav-
designers. elers and NGO`s (non-governmental organizations) which spe-
Another consideration which was given to choose the companies cially traveled to see the lifestyle as preached by ZumraNuru and
were that they have an averagely equipped workshops for produc- bought unique fashion and lifestyle products at a very affordable
ing the garments so as if the changes to increase outputs could be price.
implemented. Today, AwraAmba is a thriving, gender-equal democracy and a
hugely successful social enterprise. This has allowed the commu-
6)
3.2.1. AwraAmba nity to invest in social services, like education and healthcare,
“I wanted to live in a place where women and men live as equals which they have shared with thousands of people in the region.
and where all of our children can go to school. I didn’t want reli- These efforts have gone a long way in helping improve their rela-
gion and tradition to dictate every aspect of our lives. So I decided tionship with many of their former enemies – most of whom now
to create a place where everyone is respected equally, and works regard AwraAmba as a positive example of change and develop-
collectively, so we can stand a chance of coming out of poverty.”- ment.
ZumraNuru.
7)
AwraAmba is an Ethiopian community of about 463 people, 3.2.2. Mafi
located 73 kilometers east of Bahir Dar in the Debub Gondar Zone. Mafi is a fashion designer based in Addis Ababa. She started her
It was founded in 1980 with the goal of solving socio-economic career at 16 as a model and musician, while simultaneously study-
problems through helping one another in an environment of egal- ing nursing. She left school and quit modeling to follow her passion
itarianism in marked contrast to the traditional norms of Amhara and become a professional fashion designer. She has since gained
society. Founded by ZumraNuru, who currently serves as co-chair- critical acclaim for her cutting-edge designs; winning the 2012 Ori-
man of the community, with 19 other people who shared his vision, gin Africa's design award, showcasing her work at African Fashion
as of 2007 AwraAmba has some 400 members, and is lauded as a Week, New York 2012, and winning the 2010 Designer of the Year
model to alleviate poverty and promote gender equality in a coun- award from Alliance Ethio-Française at European Fashion Day in
Addis Ababa. Mafi works exclusively with hand-woven fabrics
6)
Awraamba community (Ethiopia), official website http://www.visi-
7)
tawraamba.com MafiMafi designer (Ethiopia), official website http://mafimafi.com/
 Sustainable Business Strategies for Local Fashion Communities (small and medium scale enterprises) in Ethiopia and Ukraine 27

made by women in villages of Ethiopia. She creates clothing and prints in our market, believe designers, and just then build strate-
accessories which are high in aesthetic value being fresh and cut- gies to come to international level.
ting-edge and at the same time very functional and wearable. MustHave is: (http://musthave.ua)
Working with hand-woven fabrics is a way for Mafi to give back • Ideal combined with each other things;
and to support women weavers livelihoods who are often margin- • High-quality fabrics and accessories;
alized within the male-dominated weaving community. The con- • 100% author patterns;
nection between hand-woven fabrics and Ethiopian culture and • More than 1000 models available;
history is something Mafi explores in her work. Culture and tra- • Family looks for mothers and children;
dition can sometimes become as essential and as invisible as air as • Limited tailoring is taking care of your personality.
exclaims the designer. Pushing herself creatively Mafi produces
9)
contemporary pieces with ancient fabrics, giving visibility to the 3.2.4. Nenka
diversity and depth of Ethiopian culture and tradition. Brand is Nenka is young brand based in second largest city after capital,
known for its strong Ethiopian essence across the fashion centers of Kharkiv. Brand “Nenka” is comparably young brand, they work
the world and is admired for contemporizing of design and culture with retail production, but all their sales based online. Founded by
in the form of garments. We consulted and proposed solutions to Kateryna Kuznecova in 2012 this brand is created by passionate
Mafi to systematize her company for better selling and also ana- youth who is dreaming to expand trends of Ukrainian national
lyzing her problems. The company wanted to increase market symbols among citizens and abroad. Currently the brand has 50
share of the products in order to basically increase revenue and sup- employees and targets the middle segment of the Ukrainian con-
port more livelihoods. They also wanted to open a retail outlet for sumer. Distinctive feature of the brand are ethnic motifs and afford-
better market presence and reaching the consumer. able, low cost of qualitative products. For now, brand position its’
marketing and management solution just on Ukrainian market:
8)
3.2.3. Musthave Website presented just on Russian and Ukrainian and as a deliv-
Musthave is young retail brand started by two young girls in ering method you can choose just system, which is based in
2010 – Anya Kovalenko and Nastya Yancovenco who studied Ukraine either collect your purchasing in Kharkiv store. Although,
together in university and were never connected to fashion indus- brand is becoming popular in the country and due to its low cost,
try. They just had dream to create some business together. After costumers prefer brand to many others competitors. Inventors
sometime, these entrepreneurs faced the problem of high-cost for themselves claim, that brand is real proof that Ukrainian high-qual-
qualitative outfits. Foreign mass-markets are either expensive or ity products can and must be affordable. They said that first aim of
have really low quality, or some of them don’t attract Ukrainian brand creation was promoting of national heritage and national
consumer by its models and designs. That is how these women symbols, and second – show to Ukrainian youth that can and
decided to open their own mass-market brand, which will sell gar- should stop their choice on locally produced garment.
ment for affordable price and good quality. Now brand is becoming
more and more popular among citizens of capital. MustHave has 4. Results and Discussion
own production of 1,000 square meters, 6 stores in Ukraine, 200
employees, on-line shopping, and representation of brand in 10 4.1. Constraints faced by Local communities/SME`s
countries. Fabrics and accessories designers buy in Europe (they As noted by Pissarides (1998), SMEs are the most dynamic
explain it by low quality of Ukrainian textile), but all manufac- firms and they are the most likely to take any available niche where
turing process is settled in Kiev. With regards to international mar- a comparative advantage exists, however as explained in the fig-
ket, brand claims that consider it in their future plans. Perhaps now ure1 below by World Bank constrained they are by economic, insti-
it’s more a skeptical dream than plans. Designers explain that their tutional and legal factors. These obstacles vary from one that are
first purpose is help to reinvent Ukrainian mass-market, and they linked to production, like limited access to capital and credits, to
want to proof that country can demonstrate quality outfits for those that shape the overall business environment, like excessive
affordable prices, but unfortunately now the European consumer regulation, weak contract enforcement, inadequate infrastructure,
associates Ukrainian products with either high price or very poor skill and education of the workers and corruption. Previous
quality. To break this stereotype, we first have to leave strong foot research (Okpara & Mengistie, 2007) shows that only 30% of the

8) 9)
Musthave (Ukraine), official website http://musthave.ua Nenka brand (Ukraine), official website http://nenka.ua/
28 한국의류산업학회지 제20권 제1호, 2018년

• Defined and strong management strategy is lacked in all off

cases;
• Large competitors such as strong western monopolies, or
cheap Asian goods.
• High cost and difficulties to access credit and finance.

4.2. Proposed Solutions for the communities

As can be seen from data above, communities face a varied
scope of problems, including technological, quality issues and gov-
ernmental issues. Hence we propose solutions in accordance to the
problems faced by the communities. Considering the fact that
countries have similar level of economy development and the main
Fig. 1. Most cited constraints to SMEs, Source: World Bank (2007a). target of expanding market to the international level is the same, we
have merged solutions in one general set of recommendations
which have just some particularities regarding differentiation in
promoters were holding Diploma or higher qualification. 92% of consumer expectations and experiences in cultural aspect.
the SMEs are sole proprietorship business and less than 10% could With numerous high-street multinational retailers such as Zara,
speak English language. Only 23% promoters had better marketing Gap and H&M, the power of trends and fashion has shifted, as well
skill, an essential skill for success of an enterprise. 55% promoters as the accessibility of fashion. At the moment, we also observe that
felt access to finance & marketing as bottleneck & problem for there is scope for local brands to establish themselves against for-
their success. 77% of the enterprises are managed by self or family. eign brands as they are less accessible to the consumer as they are
On the survey of available academic literature and studying the expensive for the masses.
communities, we came to the conclusion that communities face the Beyene (2002) suggest among the measures needed to support
following problems and concerns regarding opening international SME developments are:
market. Therefore, we have merged analysed data in following list (a) Undertake a thorough review of the policy and regulatory
which can be equally corresponded to all four communities and are environment with the aim of determining their weaknesses and
listed below: learning from best practices within and outside Africa and revamp
• Lack of better technology for increasing quality and variety of their laws, regulations and procedures in a manner that will stim-
products; ulate the growth of MSEs;
• Lack of awareness of policy coherence and institutional align- (b) Regularly review policies to determine their effectiveness; and
ment; (c) Continued effort to harmonize laws, regulations and proce-
• The products have no branding which could probably create a dures at national and regional levels;
future market or awareness;
• Lack of strong supply chain to quickly connect big cities as Following are the components in our opinion that are required to
well as rural areas; develop a sustainable strategy for the fashion communities we
• External stereotypes about products’ quality and price; studied.
• Illicit imports and negative impact of second hand clothing;
• The accounts on Social Networks are not visible enough; 4.2.1. Developing Market opportunities through better manage-
• The concepts of online selling through e-marketplaces such as ment and brand extensions
Amazon or eBay are not thought off; The main reason of the poor performance of the small business
• Consistency and quality in the final products not always cor- entrepreneurs is mainly due to lack of managerial competence and
respond to expectances; experience (Bhatia & Batra, 2003). The company must have a clear
• Word of mouth as a tool for marketing was missing in many of strategy which is in line with the marketing mix to reach the
the cases, where in we realized that the brand or artists where selected segment group (Kotler et al., 2008). In the last decade, we
not known to the consumer due to low quantities; observed that the fashion and textile sector transformed into fash-
• Small or medium size of production office, what is resulted in ion and lifestyle products which opens a great way to product
difficulties to increase sales; extensions under the same brand name which opens an opportunity
 Sustainable Business Strategies for Local Fashion Communities (small and medium scale enterprises) in Ethiopia and Ukraine 29

to develop brand extensions. Aaker and Keller (1990) defined out that understanding and practicing (SCM) has become an essen-
brand extension as “the use of an established brand name to enter tial prerequisite to staying in the competitive global race and to
new product categories or classes”. This strategy consists in using a growing profitably (Moberg et al., 2002; Power et al., 2001). Many
current brand name to launch a product in a category considered as studies found that supply chain could be used by SMEs with con-
new for the company. This new product has different functions and siderable success. Spekman et al.(1998) and Quayle (2003) found
a different nature in comparison with the product the brand used to that the introduction of supply chain has helped in reducing costs
do. As an example, the MAFI, an Ethiopian brand recently without compromising on customer satisfaction levels. Many stud-
launched a line is shoes which has Ethiopian hand woven designs. ies found that supply chain could be used by SMEs with consid-
Regarding Ukraine brand “Nenka”, recently they have proposed erable success. The perceived and realized benefits of SCM system
line of accessories in national style which are compliment clothes consists of tangible and intangible benefits. During the research it
from regular collections as well as exude as independent segment. was observed that not only the SME`s have limited access to sell-
During the research, we suggested the communities to make a ing channels but also the final production is very less in quantity
wider range of products under the same brand name which involve due to less financial capacity and sometimes availability of raw
lesser investment and more consumer involvement. materials. A good supply chain channelization shall help the raw
Certain advantages of brand extension are- faster growth materials to reach the production sites and further on go ahead to
(Albrecht et al., 2013), development of product assortment (Kap- the markets.
ferer & Tabatoni, 2012), lower introduction costs (Keller, 2003;
Tauber, 1988), increased consumer acceptance (Tauber, 1988), mar- 4.2.3. Strengthening the domestic value chain, through better
ket share (Reddy et al., 1994; Smith & Park, 1992), sales and profit designs, innovation and presence
brand image (Aaker, 1991; Balanchander & Ghose, 2003), brand A differentiation strategy must be based on two key factors: the
awareness (Stankeviciute & Hoffmann, 2011) and customer loyalty. strategic customers, the company has to identify their needs and
In order to implement brand extension successfully we would what they will value, and also on the key competitors, to be dif-
suggest to implement Keller`s Customer-Based Brand Equity ferent, the company has to identify against who it is competing
(CBBE) model for further strengthening of the company. Accord- (Hitt et al., 2009). Differentiation strategies exist in order to bring
ing to the model, building a strong brand involves four steps: - the companies competitive advantage. In order to understand why
• Establishing proper brand identity that is, establishing proper they should differentiate themselves, it is important to understand
breadth and depth of brand awareness. what competitive advantages the companies are offering to the con-
• Creating the appropriate brand meaning through strong, favor- sumers. If we take examples of both countries we studied, were dis-
able and unique brand associations. covered that the cheap Chinese product have occupied the market
• Eliciting positive, accessible brand responses which are low quality products. We do not deny the fact that Chi-
• Forging brand relationships with customers that are charac- nese products are perfectly placed in price margins but still there
terized by intense, active loyalty. exist a variety of people which would like to pay a premium price
for domestic products.
Hence one of the measures to occupy market segments through a The differentiation is due to buyers perceiving experience or
robust brand model inclusive of brand extensions and hold share of product which they expect for, therefore, the particularities do not
the market against foreign brands. have to be very big, and differentiation can just be made by a
unique packaging, advertising campaign, sales promotion or dis-
4.2.2. Enhancing Supply Chain Capabilities for Communities to tribution chain.
reach the international markets The accentuation can also be made by the product itself; the
As markets go global and competitions turning intense, organi- main sources of differentiation for products are:
zations are fast realizing the immense potential of a proactive Sup- • Differences in the product’s functional aspects
ply Chain Management (SCM) to improving their market positions • Differences in quality
in this cut-throat business environment. The tangible benefits of • Differences in price (Hoyle, 2005).
SCM implementation include shortening the product development
life cycle, increasing on-time order delivery, reducing production Hence in order to compete with the local market and the existing
costs, improving quality, reducing inventory, and bettering inven- market leaders these communities need to essentially innovate in
tory management (Higginson & Alam, 1996). It has been pointed their product so that the consumer recognizes the potential and is
30 한국의류산업학회지 제20권 제1호, 2018년

ready to pay a premium price for it. shall not fair very well as the core market strategy of social cause
shall not succeed. Since the products belong the niche market seg-
4.2.4. Sustainable production and livelihoods for enhancing ment these communities could always opt for a premium price seg-
brand image ment but not very high thought. When many firms are competing
A company's image can be described as the overall perception of for the same consumer with homogeneous product offerings, price
the company. The image can be enhanced by promotional activ- defines the competitive position, and is as a powerful competitive
ities, environmental factors, competitor’s actions or by nonpaid for weapon (Kotler, 2003; Lucas et al., 1994).
activities, such as word of mouth. Image is formed as a result of all • According to Shankar and Bolton (2004), the following list
the experiences, values and the impression that external actors have summarizes considerations and factors for determination of
about the company. The companies from Ethiopia and Ukraine are pricing strategies:
a living example of sustainable development, conscious consump- • Market factors – market and city characteristics (metropolitan,
tion and sustainable material sourcing. The incentive of sustain- small city);
ability claims that it can: i) increase brand value by differentiating • Chain factors – chain size, positioning, in regards to corporate
the offer from competitors’ or, conversely ii) shield brand value mission and polices;
against reputation risks related to name and shame campaigns. • Store factors – store size, category assortment;
Thus, the higher the brand value and reputation, the stronger the • Category factors – size assortment, storability, extent of necessity;
incentive to adopt sustainability practices (Ricchetti & Khurana, • Brand factors – brand equity or preference, relative brand
2017). Such factors could be used to build up brand image in the advertising, relative trade deals;
understanding of local and foreign consumers. • Customer factors – consumer sensitivity to prices changes.
These brands should take shape in terms of social entrepreneur-
ship models. These new kinds of companies are defined as “inte- 4.2.6. Awareness to financing opportunities and enhancing insti-
grated enterprises” or “hybrid enterprises”, and they can generate tutional alignment
different forms of social innovation. Hybrid enterprises are those The governments of emerging opportunities often have a lot of
enterprises “straddling the boundary between the profit business opportunities in terms of trade agreements, funding, capacity build-
world and the social mission-driven public and not for profit orga- ing of workers and exposure to opportunities outside. A common
nizations. Thus, they do not fit completely in either sphere” (Hock- problem observed in SME`s especially in Ethiopia was up to the
erts, 2006). Designing sustainable and strong brands with a mark quality of products as to be desired by European and Amer-
message has been of great significance on the commercial market. ican markets. The merchandise need to be up to the quality mark
A strong brand is the company's most powerful asset and the and this needs a kind of superior workmanship. For this we propose
importance of it is recognized by various companies (Melin, 1999). that capacity building would be a very important parameter to be
An effective image does three things for a products or company; it implemented in the Performa of the companies. Skilling of labor
establishes the product's planned character, it differentiates the becomes a very big area of development for both the countries and
product from competing products and it delivers emotional power there has been support and funding through NGO`s from European
(Kotler & Keller, 2007). Such a message of social hybrid enter- Union, United nations and USA in both the continents. There are
prises shall attract a lot of consumer to buy products. To highlight some examples of initiatives in both the countries; Small and
here the case of AwraAmba community in Ethiopia, the existence Medium sized Enterprises (SMEs) in Ukraine can receive support
of such a community is a live example of such social development from the EU's SME Flagship Initiative called Deep and Compre-
and such stories work quite well in the consumer market. There is a hensive Free Trade Area (DCFTA) and The Center for African
small margin of people supporting such communities but surely is Women Economic Empowerment (CAWEE) established in 2004,
ever increasing. registered under the Ethiopian Ministry of Trade as a non-govern-
mental organization. Such organizations not only provide funding
4.2.5. Pricing Strategy but also develop projects to help local communities in issues such
Local fashion communities are generally small or medium enter- as capacity building, sourcing raw materials and design interven-
prises in size and are able to produce and sell very limited quan- tion to make better products. We found that they had not much
tities of products which are often a threat to their growth as a awareness on such schemes and programs which would help them
business. Here concepts of mass production or economies of scale get international fame and help with issues.
 Sustainable Business Strategies for Local Fashion Communities (small and medium scale enterprises) in Ethiopia and Ukraine 31

4.2.7. E -retailing and Social Media as an international selling and handlooms of Ethiopia for woven fabric which could suffer
platform major duplication in the coming future if not protected. Hence, we
E -retailing and social media found a natural fit with fashion and suggest that registering the state of the art procedures under Geo-
lifestyle merchandise. Selling online is directly connected to exhib- graphical indication (GI) would be a very important measure to
iting online through various means of social media. Singh et al., save such art and make sustainable business for the communities.
2016 states that that Ethiopia doesn’t have significant and effective World Trade Organization’s Trade Related Intellectual Property
e-commerce platforms and Information and Communication Tech- Rights (TRIPS) Agreement, adopted in 1994, Geographical Indi-
nology (ICT). Ethiopia is still very nascent in approach to social cations (GIs) are “indications which identify a good as originating
media and online selling as internet is still more expensive then in the territory [of a member] where a given quality, reputation or
water in the country whereas we found that Ukraine is quite open to other characteristic of the good are essentially attributable to its
social media marketing and selling. The brands from Ukraine are geographical origin”.
present on the internet and are also practicing online selling but do
not achieve much success in this type of selling. The emergence of 4. Conclusions
social media (e.g., Facebook, Instagram) has boosted interest in
word of mouth and viral marketing among brands. Word of mouth Although there is a lot of encouragement to SME`s and local
(WOM) – interpersonal communication about products and ser- communities in the respective countries but there still lies an
vices between consumers is one of the most influential sources of immense work to be done in internal business strategy develop-
marketplace information for consumers (Alreck & Settle, 1995; ment. We started our research by observation on the products that
Arndt, 1967). When WOM travels on the Internet, it is much faster they made and how they were supplied to the market. With the
and effective in terms of communication and convincing the con- growing consumer demand in both the countries and simultaneous
sumer to buy a particular product as it’s accepted by a particular tar- entries of foreign mass market giants the task becomes quite com-
get group. The companies we consulted need to essentially form a petitive to achieve a right spot in both domestic and international
very strong social media standing and essentially promoting the market. We also conclude that there is a need of systematic man-
social message what they are working for to sell beyond borders. agement in terms of design and production to be implied in these
The tools and approaches for communicating with customers have communities in order to increase their presence in the market. The
changed greatly with the emergence of social media; therefore, opening of trade policies in the countries have raised a serious
businesses must learn how to use social media in a way that is con- threat as the consumer today is essentially price-sensitive and when
sistent with their business plan (Mangold & Faulds, 2009). has more options in a lower price range is automatically attracted.
Skilling of labor and producing better quantity and quality of the
4.2.8. Intellectual Property products could be considered as key factors for increasing revenue.
In the 90`s a very famous indigenous art of Banaras weaving in There is fierce competition from imported second-hand clothing,
India began to get copied by the Chinese but was not paid much mostly through illegal routes, and imports from cheaper sources
attention by the Indian government. By the beginning of the mil- due to trade liberalization. The communities in general do not have
lennium the artists began to suffer so bad that they had to close their much awareness on the new schemes and generally find it difficult
mills resulting into the death of state of art Banaras weaving. Fash- to approach to the banks for finances or loans. If the governments
ion communities mostly came into the market place due to small of the respective countries intervene and acknowledge the tradi-
but very effective innovation which leads to sustainable develop- tional art and craftsmanship, it shall be a great step in saving these
ment in their societies and hence they have survived till today. In communities from a tough time ahead due to globalization. How-
order to take their product beyond borders they essentially need to ever, we also see the novelty of product, the social message and the
register it under intellectual property rights laws in the countries initiative taken by the women entrepreneurs despite of the prob-
they were originated from. We understand the fact that fashion lems they faced in these emerging economies.
products couldn’t successfully come under IPR laws but registering Our research has raised actuality and may result in significant
would surely protect rights of the workers in such communities and positive impact for all of communities. Moreover, there are a lot of
also go much ahead in saving their product from getting replicated such communities that might need such intervention in fashion and
and mass produced by production economies. During our research, textile industry sector from academia and governmental institutions
we found brilliant examples of traditional Ukrainian embroideries worldwide.
32 한국의류산업학회지 제20권 제1호, 2018년

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