Italy’s fashion industry signs deal to build ties with Iran

MILAN/PARIS: Italy became the first European country to take steps to help its fashion industry build a stronger presence in Iran following the lifting of Western sanctions.

The two countries signed an agreement during a two-day visit by Italian Prime Minister Matteo Renzi with a delegation of business leaders to increase trade between Italy and Iran and reinforce industrial cooperation.

The deal was signed by the National Textiles and Fashion Association Sistema Moda Italia (SMI), which represents a sector worth more than 52 billion euros (US$59 billion) in revenues, and its Iranian counterpart the Tehran Garment Union (TGU).

It aims to cut red tape and make it easier for Italian companies to obtain the TGU licence required to operate in Iran.

Some analysts estimate the oilrich Islamic Republic of nearly 80 million people has more than three million high net worth individuals who are major and regular buyers of luxury goods.

“Iran could be an interesting expansion market, probably worth about two per cent of the global luxury market, once developed,” Exane BNP Paribas analyst Luca Solca said.

Renzi was accompanied by some 60 business leaders from sectors including energy, railways and defense. They pledged billions of euros in credit lines and guarantees, in a broader effort to establish a strong foothold in Iran.

“Iran represents a market with great opportunities and I am certain that Italian companies will be able to grasp them,” SMI Chairman Claudio Marenzi said.

The sanctions on Iran over the past decade did not apply to cosmetics and many other consumer goods, but they made it difficult for European companies to own stores in Iran. Iran challenges

Setting up businesses in Iran is also no easy task, executives and consultants say, due to a lack of appropriate retail infrastructure, high tariffs and banking restrictions.

A lack of enforcement of international trademark protection agreements also means Iran is flooded with counterfeits.

Italian firms appear to have adopted a more proactive attitude than their French luxury and fashion rivals.

In February, Florence-based fashion house Roberto Cavalli opened its first shop in Iran, in the footsteps of leather goods maker Piquadro and men’s shirt company Camicissima.