Fashion’s Proximity Strategy: How Turkey Became an Essential Hub

There is little magic in the fact that Inditex has become the number one retailer in less than half a century. Inditex giant has found the formula for bringing the latest trends to market faster than its competitors and, most importantly, at an affordable price. Although today the levers that allow Inditex to maintain a capacity to react and produce faster than the rest of the market include many factors (such as process automation or Artificial Intelligence), the ace that the Spanish giant pulled out of its sleeve fifty years ago was one: to produce in proximity.

Despite the fact that China has been the main supplier of fashion around the world for years, Inditex’s best business strategy has always been to create a value chain as close as possible. “To guarantee an agile and efficient response to this demand, a significant part of our garments are manufactured in markets close to our headquarters, such as Spain, Portugal, Morocco and Turkey,“ explains the group in its latest annual report.

Although in the last year the company has changed the way it reports its production data, almost half of Inditex’s suppliers were located in one of the above four markets. That same year, the group worked with 847 factories in Turkey alone, with a total of 330,926 workers, making the Eurasian country the group’s main supplier in these terms (although surpassed by Morocco and Portugal in number of suppliers). The country’s weight within Inditex’s value chain thus reached 23% of the total, a figure much higher than that of its competitors’ suppliers.

In the case of H&M, for example, the company currently works, according to data updated at the close of the first quarter of 2025, with 786 factories in Turkey, out of a total of more than 6,000 plants worldwide. This translates into a 13% share of the company’s sourcing map. Fast Retailing, on the other hand, the company that owns Uniqlo, works hand in hand with only one Turkish supplier, out of the total of 448 with which it operates globally, i.e. just 0.2%.

Turkey emerged as an alternative to traditional manufacturing in China or Bangladesh, in the heat of geographical proximity to Europe.

Something similar happens with the two U.S. giants (for whom Turkey would also be considered distant, of course), Gap and Levi Strauss. The two companies outsource part of their production to 14 factories and 18 factories in the country, respectively, which account for 2.3% and 3.25% of the total, respectively.

The other major retailer that also concentrates a large part of its sourcing in the country is Mango. The Spanish company worked with a total of 513 Turkish factories in 2024, 19.17% of the total, the second largest market after China. Even so, Mango slightly reduced the weight of the Eurasian country compared to the previous year, by almost three percentage points.

The two I’s, the big problem of a promise

The outbreak of the pandemic and the continuing attacks in the Red Sea have made Turkey a promising country for fashion compared to China, a hub that is much more distant and exposed to disruptions on the long road that garments must travel to reach Europe. The high inflation that dominates the Turkish economy, coupled with a lack of investment, however, have truncated the country’s ability to truly compete against the Asian giant. “The textile sector in Turkey is facing serious problems stemming from chronic cost pressure and increasing global competitiveness,“ says Yusuf Akbolat, a journalist and entrepreneur in the Turkish textile sector.

At the end of 2024, the Istanbul Textile and Raw Materials Exporters Association (Ithib) put Turkish textile exports at $11 billion, well below the $19.2 billion reached in 2023. The drop was, moreover, only in value terms, maintaining the same volume from year to year. “Inflation and rising energy and labor costs are making the country less competitive,“ says Akbolat, “to the point that today it is already up to 45% more expensive to produce in Turkey than in the average Asian country. Last year, as many as 86 of the country’s large industrial textile companies went out of business.

For the manager and industry professional, however, Turkey’s opportunity to emerge as a relevant hub for textiles has not disappeared. “In the face of the conflicts that are spreading around the country, Turkey is currently in a geopolitical position from which it can take advantage,“ Akbolat assesses. In the last year, in fact, in the face of the fall in the textile trade, a new sector has appeared on the rise: technical fabrics. According to the same Ithib data, exports of this type of material increased by 3.3% in 2024, reaching $2.2 billion, and have the potential to close the year at $2.5 billion.

“We can be a relevant textile hub, we have made the sustainable and technological advances that European companies have come to expect from us, and we are ready to continue specializing in an increasingly sophisticated industry,“ said the businessman.

The slowdown in Turkey, however, has also left the door open to other emerging countries, which are gradually gaining weight in the fashion value chains. Very close to the Eurasian powerhouse, Egypt is increasingly emerging as a new possibility, just as close but cheaper, and adding a new challenge to the eternal promise of nearshoring.