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Because of it’s high quality and labor, hand-woven carpets
have a better export market than an internal one.
Hand-woven Carpet has long been a
major export earner among non-oil goods.
Laws and regulations of
production, marketing and exports of hand-woven carpet must be revised: First
Vice-President.
While using Persian carpet
designs in their products, the rivals of Iran have launched a vigorous marketing and
distribution campaign since three decades ago to increase their share of global carpet
trade: Commerce Minister |
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According to
statistics from the Customs Administration of The Islamic Republic of Iran 12.4 million
tones of non-oil goods, worth 3,103 million dollars, was exported in 1378 of the Iranian
solar hegira calendar (1999),of which, 35.9 thousand tones or 769.9 million dollars were
handicrafts and hand-woven carpets. Hand-woven carpets take the lion's share by 700
million dollars, up by 25.4 per cent from a year earlier.
Based on these statistics, Iran exported 570 million dollars of hand-woven carpets,
accounting for 18.7 per cent of the entire non-oil exports in 1377 (March 1998 –
March 1999). From this, we can conclude that hand-woven carpet is still the major export
earner after oil only to be followed by pistachio.
A review of the figures in 1378 (1999) and forecasts of experts indicate that Iran's
non-oil exports will considerably grow in 1379 (2000) and the following years. Since
hand-woven carpets have major importance in national production, employment and foreign
income, it is pertinent that we now have a new look at it's production, export, and
international market.
Production
Little research has so far been conducted in the area of carpet production and the number
of jobs created by the industry in Iran, and since 1360 (1981), Iran's carpet industry has
posted growths only in 1367 (1988), 1373 (1994), 1375 (1996).
According to a survey, household carpet production grew to 7.5 million square meters in
1373 (1994), up from 2.5 million in 1367 (1988). In 1375 (1996), around seven million
square meters of hand-woven carpets were produced. The survey of 1373 (1994) shows that,
among the Iranian provinces, Khorasan had the highest carpet output by one million square
meters (20 per cent)and the northern Gilan province registered the least production by
1,100 square meters. Carpet producers of the Eastern Azarbaijan Province earned the
highest income at 424 billion rials. The highest price for a square meter of hand-woven
carpet belonged to Western Azarbaijan Province at 600 thousand rials.
In 1375 (1996), around seven million square meters of hand-woven carpets were produced in
Iran. Eastern Azarbaijan took the lion's share of rug production income at 31 per cent ,
also claiming the highest income for a square meter of hand-woven carpet at 516 thousand
rials. In the meantime, Khorasan posted the highest carpet production by 1.2 million
square meters, and Gilan the lowest by 800 square meters.
Rug production increased 2.8 per time from 1367 (1988) to 1375 (1996), whereas the value
of rugs jumped 13-fold. According to statistics the rate of increase in rug production
after 1373 (1994) was higher than the preceding years. Between 1367 (1988) and 1373 (1994)
rug production increased by a collective 2,623 thousand, which means an average annual
increase of 437 thousand square meters. However from 1373 (1994) to 1375 (1996), carpet
production went up to almost 2 million square meters, giving us an increase of one million
square meters annually.
The price of a square meter of hand-woven rug surged, by average, to 316 thousand rials in
1375 (1996), up from 69 thousand rials in 1367 (1988). In other words, the average price
of a square meter of carpet grew 4.6 times between 1367 (1988) and 1375 (1996).
Meanwhile, in 1375 (1996), the number of carpet-weaving frames stood at 1.2 million units
across 210 towns and 27 thousand villages. In the same year, the number of workforce
engaged in the carpet industry amounted to 2.2 million people. Taking into account the
family members of the workforce engaged in the carpet industry, the figure would grow to
8.8 million people, equal to 14.6 per cent of the country's population.
These figures verify the high rate of jobs-creation in the carpet industry, especially in
the deprived areas. Thus, with low investment, the carpet industry produced the highest
number of jobs and incomes.
Against a backdrop of seven million square meters of hand-woven rugs produced in 1375
(1996), 252 factories produced over 35 million square meters of machine-made carpets. The
number of workforce working in the machine-made carpet factories amounts to 20 thousand
people.
According to a survey, every 3.8 square meters of hand-woven carpets creates employment
for one person, as opposed to 1,750 square meters in the case of machine-made products. In
other words, the jobs-creation rate of hand-woven carpet is 422 times the machine-made
carpet's.
Exports
Hand-woven carpet has long been the second export earner after oil; however, this industry
has suffered setbacks during various years. Because of its high quality, labor and
finished price, the hand-woven carpet has a much better export market than an internal
one. This industry is also very important as a foreign income. Therefore, any recession in
the carpet industry would unleash unemployment and reduced incomes for the 10 million
people engaged in the industry, not to mention the loss of a considerable percentage of
the country's foreign income.
After 1362 (1983), the non-oil industries, especially the carpet industry got a boost,
mainly because of the new encouraging policies such as extended deadline to exporters for
the return of foreign exchange into the banking system, allocation of export proceeds to
exporters for the import of authorized goods, relaxed banking regulations and the
introduction of the floating foreign exchange rate instead of the preferential rate.
These new policies pushed up the amount of carpet exports to 2,132 million dollars in 1373
(1994). A year later, the carpet exports slipped to 979 million dollars. The slump is
blamed on the imposition of stringent banking laws on exporters for depositing guarantee
funds with the banking sector for the return of the foreign exchange, high carpet prices,
and the reduction of purchase power among the European customers.
The downward trend continued until 1376 (1997), mainly because of the turbulence in export
regulations, depreciation of the German deutschmark against the dollar, and flagging
demand for the Persian carpet.
Carpet exports tumbled to 641 million dollars in 1375 (1996) and 636 million in 1376
(1997). This continual downward trend reduced the share of carpets as non-oil exports from
44 per cent in 1373 (1994) to 22 per cent in 1376 (1997). It is obvious that the continual
of these policies and negligence will result in more cuts in the share the hand-woven
carpet has in the non-oil exports.
The First Five-year Economic Development Plan (1989-1993) envisioned 4,400 million dollars
in carpet exports. The country's carpet exports topped 4,504 million dollars, well above
the plan's forecasts.
The Second Plan (1995-1999) envisioned seven billion dollars in carpet exports, a target
level which for many reasons was not materialized.
The carpet industry has long been plagued by smuggling, which is encouraged by the high
price difference between the foreign exchange rate of the black market and the officially
declared rate. On the other hand, hand-woven carpets are being unrealistically priced, and
this causes problems in the international market.
The importers of Iran's hand-woven carpets are mainly countries with high per capita
income. They include Germany, Italy, Switzerland, France, Austria and Britain in Europe;
plus, the Untied Arab Emirates (UAE) and Japan in Asia, and Canada in America. European
customers, led by Germany, buy around 70 per cent of Iran's carpet exports.
Every 3.8 square meters of
hand-woven carpets produces one job.
Global Carpet Market
Europe handles 60 per cent of the world's carpet trade. Iran's share of carpet exports
dropped to 35 per cent in 1995 against 42 per cent in 1980.
In 1376 (1997), Iran’s hand-woven carpet export totaled 635.7 million dollars; out of
which 259.6 million dollars or 41 per cent went to Germany, 94.7 million dollars or 15 per
cent to Italy, and 63 million dollars or 10 per cent to Switzerland.
These figures indicate the high dependence of Iran on a limited number of markets in
Europe. For example, between 1370 (1991) and 1375 (1996), Germany has purchased, by
average, 42 per cent of Iran's annual carpet shipments. This export dependency to a
handful of countries will make the export of this product very vulnerable. In 1996, Iran
held 40 per cent of the German carpet market, followed by India, China, Pakistan, Turkey
and Nepal.
Meantime, India has narrowed its wide gap with Iran by increasing its carpet exports to
Germany from 21 per cent in 1994 to 31 per cent in 1996.
Opinion of State Officials about
the Ninth Hand-woven Carpet Exhibition
With the above general introduction to carpet exports and it’s global market,
here is a look at the Ninth Hand-woven Carpet Exhibition and the views of some officials
in regards to appropriate solutions for this problem.
The exhibition, held recently in Tehran, was attended by First Vice-President Hassan
Habibi and the Commerce Minister Mohammad Shariatmadari. Also, around 445 manufacturing
units and export firms took part in the exposition, which was laid out in an area of 47
thousand square meters at the Tehran International Fairgrounds.
"The delicacy and resistance of the Persian carpet represent the characteristics of
the people of Iran. This natural and cultural mirror should be supported," said Mr.
Habibi as he stressed the need for a review of carpet production, marketing and sales
methods.
He said that unless the country revises the reigning regulations, it should not expect a
reversal of the current downward trend in the carpet exports.
The vice-president called for the improvement of the quality of raw materials and dyes,
and the diversification of carpet designs. "Simultaneous with the overhauled, we
should preserve the identity of the Persian carpet" he added.
The minister of commerce said that India, China, Nepal and Pakistan collectively hold 60
per cent of the global carpet market; two times the Iranian share.
Mr. Shariatmadari blamed the decline in Iran's carpet exports on intensified international
competition, global recession, lack of coordination among the hand-woven carpet-producing
countries, continued reproduction of Persian carpet designs by other countries, and
negligence towards new marketing systems.
He added that Iran's carpet export is faced with the two major problems, which are low
prices of rival products and reproduction of the vernacular Persian designs by other
producers.
"India offers 65 per cent of its carpets with the Persian designs," said he
contending that the low prices of Indian carpets is because of its low labor costs and the
use of new industrial methods. The minister said the rival producers had started their
marketing and modern distribution methods since three decades ago. "The methods have
helped them to constantly increase their share of international carpet trade."
Although international carpet trade grew from 350 million dollars in 1353 (1974) to 2.4
billion in 1373 (1994), Iran's market share has dropped from 59 per cent to 31 per cent
within the last three decades, he added.
The minister urged the academics and researchers to assist the government in working out
new solutions to recover the ailing industry.
Mr. Shariatmadari blamed poor marketing methods and advertisement by the Iranian
institutions as the main cause of the looming recession in Iran's carpet industry.
"The use of new scientific marketing methods, knowledge of the rival producers’
methods, and of the consumer taste will help stimulate the carpet industry."
He said the Export Promotion Centre of Iran (EPCI) has revised its procedures for carpet
exports and coordinated its regulations, in terms of foreign exchange guarantee deposits.
"The limitation of Iran's carpet exports to Europe has stripped the exporters of the
chance to coordinate their products with the consumer tastes across the world," he
argued. "The reigning recession of the European states will directly affect Iran's
carpet industry," said the minister as he proposed exporters to find new emerging
markets in Southeast Asia, Latin America, the Pacific and in some African states.
From 1358 (1979) to 1378 (1999), Iran earned more than 13 billion dollars combined in
carpet proceeds. Taking into account the value of smuggled carpet consignments and
passenger goods, the figure would grow much higher, he added.
He said a flourishing carpet industry not only would create employment, but also would
directly reduce the rate of immigration of villagers into the big towns.
Mr. Shariatmadari called for the strengthening of the export unions, syndicates,
self-sufficiency institutes and research centres. He proposed the centres control the
quality of carpets, address consumer taste and use innovative and genuine motifs to expand
Iran's carpet market.
The minister said a variety of elements would help achieve the momentum including:
establishment of non-public funds for protection of the carpet industry, expansion of
exhibitions at sales centres, creation of free carpet export zones, expansion of
carpet-weaving workshops, protection of carpet-weavers, production of cheap raw materials,
reduction of expenses and expansion of insurance coverage for the carpet-weavers.
A Review of the Third Plan
The Third Five-Year Economic Development Plan, passed by the Islamic Consultative
Assembly, was set in place in 1379 (2000). The plan has ceded carpet management including
policy-making, planning and coordination to the Organization of Hand-woven Carpets and
Handicrafts.
Under an amendment made to Chapter 14 of the law of the Third Plan, all the institutions
handling the carpet affairs will be dissolved and the Ministry of Commerce must set up an
Organization of Hand-woven Carpets and Handicrafts as the top authority in the field.
The new organization, which has been authorized to take all the necessary measures to
expand the carpet exports, has sparked glimmers of hope that the carpet industry may
blossom again in the near future.
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