Inter-actor Network Creation

The Case of Denizli (and Uşak) Home Textiles Cluster(s)

Important Notice

Launched in March 2007, “Development of a National Clustering Policy” is an EU-funded technical assistance project (the Project, hereinafter) that seeks to contribute to elaboration of a national clustering policy, through development of a “whitepaper” on clustering. The Project is being implemented by the Undersecretariat for Foreign Trade (UFT) with the technical assistance of an international consortium, contracted by Central Finance and Contracts (CFCU).

The methodology, deployed for the development of this and other Roadmaps reflects the key priorities of the DCP Project. Therefore, it, on the one hand aims at developing a roadmap that demonstrates how the cluster can be more competitive, and on the other, serves the key purpose of informing the process of cluster policy-making and development of policy-level and institutional recommendations. The Roadmap for Denizli (and Uşak) Home Textiles Cluster(s) has been developed with direct involvement of a broad range of stakeholders: enterprises, governmental and non-governmental organisations, academic and research organisations, and other relevant cluster actors. Key findings from field studies and roadmap development process as reflected in the executive summary of the final report, describing Denizli (and Uşak) Home Textiles Cluster(s) is presented below...

Denizli (and Uşak) Home Textiles Cluster(s)

The roadmap development process within the DCP Project has been designed as a learning experience. The main objective of designing the process as such was to seek answers to the questions, raised commonly by various stakeholders. “How one should determine the geographical boundaries of clusters?” was one of these frequently asked questions. In the case of home textiles in Denizli and Usak, the statistical mapping exercise demonstrated strong agglomerations in these two adjacent provinces, implying the possibility of a cluster that stretches over the two provinces.

The field studies, which started with a reconnaissance visit in early September, revealed that Denizli and Usak are specialising on different product lines, with a negligibly small room for collaboration. The present level of commercial relations in the field of Home Textiles (HT) is, reportedly, very small as well, with a small share of Denizli’s HT products being “dyed and finished” in Usak. Towels and bathrobes comprise the vast majority of the HT production in Denizli (with bed sheets and bed linens a distant third), whereas Usak is specialised on production of blankets. As such, there are in fact two distinct clusters located separately in these two provinces. This report focuses on the Denizli HT Cluster, which is considerably larger than the blankets cluster in Usak.

The assessments revealed that Denizli HT Cluster enjoys certain competitive advantages, however at the same time is faced with serious challenges. Leveraging on literally hundreds of years of experience in textile business, the Cluster has expanded rapidly in 80s and 90s; however failed to establish local mechanisms that would prepare the Cluster for today’s global competitive landscape. It is evident that the Denizli HT Cluster is endowed with most of the “basic” factor inputs (conditions); however is not equally strong when the matter of analysis is carried up to the advanced factor conditions. The strong sense of regional stewardship, the inimitable tacit knowledge and business insight, the critical mass of cluster actors and the culture of “co-opetition” are worth highlighting. 

In the Denizli HT Cluster firms do collaborate but not at a level that would diffuse information and knowledge in the cluster and/or import these from elsewhere. Cluster companies collaborate pretty effectively in the manufacturing process, however collaboration in R&D, innovation and technology transfer is nonexistent.

The work of DCP Project in Denizli also demonstrated that the prevailing form of corporate institutional structure in Denizli is the family-owned businesses. The capacity of this institutional structure is far away from being consistent with the knowledge, infrastructure and market needs.

During the early phases of the road-mapping process, a consensus regarding cluster actors’ strong aspiration to build an internationally recognized regional brand emerged. The vision of the Denizli HT Cluster is “To become an internationally recognized geographical brand that conveys state-of-the-art home textile products and an identity with history and culture.”

The brand value propositions for this cluster vision includes: (a) simplifying a time–pressured selection and purchasing process for customers and consumers by building the image of a place with producers of state-of-the-art quality and design products; (b) consistency with the brand image throughout the whole region; (c) building the confidence of customers by setting high standard production processes; and (d) an image as a place where constant product improvements are happening, while at the same time preserving in the design the region’s unique history and culture.

The cluster strategy was then identified as “to differentiate products and services produced in Denizli by continuously creating value for customers (buyers) and consumers (end users) in every aspect of the business, transforming from a region of conventional home textiles into a best practice innovative cluster of home textiles”

Three strategic directions can be derived based on the vision and the overarching strategy: (a) the attempt to upgrade the relationship with customers to a level that can be describes as a partnership; (b) to embark on a branding exercise; and (c) to make an innovation the permanent activity for the cluster that will result in new product developments.

The key success factors have been determined as follows:

• A proactive and collaborative relationship with leading world retailers in achieving their mission/vision,
• Understanding the market and industry trends,
• To be recognized internationally as a leader in compliance with cutting edge standards,
• To have an internationally recognized brand,
• Intensive innovation in the region,
• Overall leadership of the cluster and continuous process ownership for cluster activities.

The abovementioned key success factors were then translated into requisite skills and capabilities, and to six cluster actions.

The Cluster actors decided to create a new organization which will have two main components, a Cluster Advisory Board (CAB) and a professional management staff. The CAB would act as a consultative committee to guide the cluster’s overall development in the initial stages, and it would give direction to the staff. The CAB would have seven representatives, four of which would be permanent (DETKIB, Chamber of Industry, Chamber of Commerce, Pamukkale University) and three (business and opinion leaders from individual companies in the cluster – drawn from active exporters, subcontractors, and customers) would be rotating, according to the following scheme:

At the cluster-level the most immediate action that needs to be taken is the establishment of the Cluster Advisory Board. Secondly, the ‘naturally selected’ leader or leaders should be identified and engaged. Thirdly, the Cluster actors should ensure that the Cluster Initiative encompasses representatives of customers and buyers. Fourthly, the cluster network should be widened with local institutions for collaboration, especially knowledge producing organizations. Finally, the Cluster Initiative should try to address the issue that researchers in universities have low incentives to undertake contract research.

Fundamentally, most of the actions needed to transform this industry into a more innovative cluster need to be undertaken by individual companies themselves – and the leadership of the cluster needs to come from the private cluster. However, given the degree of transformation which is needed, and the urgency of the current market situation, active policy intervention by government can help to accelerate the transformation process.