Way forward for Georgian fashion firm

A woman sewing © EBRD

by Nina Tsintsadze

With joint EBRD and EU credit line, Fashion House Materia tailored its business to meet EU standards

“Materia” means fabric in Georgian, without doubt a winning name for a fashion house based in Tbilisi.

The local brand offers its customers the premium clothing line Materiel and more affordable products under the Dots line. The company also works closely with the government of Georgia, producing uniforms for public institutions and sportswear for Georgian rugby players.

“The fashion industry is gradually becoming trendy in Georgia and attracting international attention. This is logical because when tourists arrive they are less interested in the big retail chains, [and more interested] in unique and original pieces,” says Lado Giorgadze, CEO of Fashion House Materia. “We cooperate with experienced designers and also have open doors for ideas from young creators.”

With shops in the capital and the Georgian seaside town of Batumi, Fashion House Materia dates back to 1949. The firm has undergone major transformation and rebranding since Soviet times, moving from public to private ownership. It is one of the key players in the Georgian fashion market, which has recently come into the spotlight thanks to well-known designers such as Georgian Demna Gvasalia of Balenciaga taking over runways across the globe and to a number of resourceful and emerging talents creating fashion lines in the country.

Until very recently, the company had been leasing premises with outdated facilities and equipment that was not fully suitable for a sound manufacturing process. But the firm became one of the first to benefit from the EU4Business-EBRD Credit Line.

Materia secured financing from local partner Bank of Georgia to modernise their equipment and machinery and to introduce the best workplace health and safety practices for a newly built and owned clothing factory.

The EU4Business-EBRD Credit Line – a joint initiative between the European Bank for Reconstruction and Development (EBRD) and the European Union (EU) – targets small and medium-sized enterprises in Georgia, Moldova and Ukraine. All three countries are signatories to an Association Agreement and benefit from a free trade area with the EU.

The EU4Business-EBRD Credit Line initiative helps interested businesses to make the most of open access to the EU, the world’s largest trading block, by modernising their production and services in line with EU standards. Through local partner banks, the EBRD offers up to €380 million in credit lines and trade finance. This is complemented by over €19 million of EU funds under the EU4Business Initiative for up to 15 per cent investment incentives and technical assistance. In Georgia, the EBRD and EU partner with local TBC Bank and Bank of Georgia. 

“The credit line offered by the EBRD and EU was the best fit for us. We focus on continuous development – boosting our competitiveness, increasing the quality of our products, taking care of and creating better working conditions for our people. This is what makes our company stand out,” says Giorgadze. “This particular financing facility helped translate into reality our ambition of running a company with high European standards.”

The investments purchased sewing machines, software programmes for drawing and formatting to optimise fabric use, cutting equipment and more, all fully compliant with the relevant EU directives. The manufacturing process now runs like clockwork in the new five-story building. Inspirational ideas from designers are collected and, with new machinery in place, the entire process has become more efficient, delivering products of the highest quality.

Well-functioning electrical and fire safety systems, personal protection equipment, modern electro-mechanical heating, ventilation, and air-conditioning (HVAC) all make work more enjoyable for almost 200 employees of the company.

Mariam Papinashvili, a tailor at the factory, believes that a comfortable and safe working environment can contribute to production efficiency and overall team spirit.

“In future, I plan to pursue a career as a designer and it is very useful for me to have an opportunity to see each step of the production cycle. The new equipment makes my work so much more enjoyable. I learn new tricks of the trade and overall grow together with the company,” she comments.

Giorgadze adds: “During the whole project cycle, we were guided by the team of consultants while renovating and equipping our new premises. Their free-of-charge consultations helped us to plan and navigate better from day one to project completion. This assistance ensured that each of our investments in equipment and technology was in line with EU standards, and that was our primary objective.”

“The cash-back we received was also an extremely interesting product and we plan to apply these funds to further enhance our quality-management systems,” he continues.

Currently, Fashion House Materia exports its products to European, Central Asian and neighbouring countries. The firm presents its products at the multi-brand store in New York and fashion lovers worldwide can purchase favourite items online. But the company plans to expand and reach more European markets. 

Several influential European buyers have already expressed interest in Fashion House Materia. The newly refurbished clothing factory, operating under the highest standards and supported by institutions such as the EBRD and EU, boosts the confidence of buyers in creating partnerships with Materia.